Canola futures played around either side of unchanged on Thursday as the bullish momentum in crop futures was dampened by outside factors.
It appears there is a move afoot among some officers of the U.S. Federal Reserve to end the central bank’s stimulus efforts. There is disagreement between those who worry the stimulus will cause inflation and those who think it must continue to support the weak recovery and help job creation.
The possibility of less stimulus pushed money from commodities and stocks into the relative safety of the U.S. dollar. Weak economic news regarding U.S. employment and other measurements also put markets in a negative frame of mind.
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Alberta crop conditions improve: report
Varied precipitation and warm temperatures were generally beneficial for crop development across Alberta during the week ended July 8, according to the latest provincial crop report released July 11.
March canola closed at $643.40, down 80 cents. May closed at $631.70, down 90 cents and new crop November finished at $571.80, up $1.
USDA’s Outlook Conference in Washington D.C. confirmed its expectation for record U.S. corn and soybean crops that are expected to knock down corn prices down by a third and soybeans by 13 percent.
The USDA expects domestic wheat production will shrink a little and its price will hang on better than the other two major crops.
It is arguable that USDA is optimistic on production and under reporting on demand.
More details on the USDA’s numbers are later in this report.
• The wait to load soybeans at Brazil ports is already weeks long and unions are planning disruptions to protest government port privatization plans that would affect job security for union members. That should keep importers coming to the U.S. for soy, providing support for the Chicago oilseed complex.
• Wheat futures were hammered lower as more than a foot of snow fell on dry areas of Oklahoma, Kansas and Nebraska. More moisture is expected on the weekend. Chicago wheat fell 2.4 percent.
• The International Grains Council expects global wheat production to rise four percent or 26 million tonnes to about 682 million tonnes. However, increased demand should consume most of that rise and ending stocks are expected to climb only two million tonnes, following a 21 million tonne decline in 2012-13.
• U.S. oil and food groups petitioned the U.S. Supreme Court to reverse a lower court’s decision upholding the use of higher ethanol blends (E15) in cars.
The U.S. ethanol industry convinced the U.S. Environmental Protection Agency in 2011 to allow E15, which contains 15 percent ethanol, in cars built in 2006 and before.
Greater ethanol use cuts into gasoline producers’ profits. Food groups say the use of corn in ethanol drive the price of corn and other foods higher.
Lower courts did not accept arguments that higher ethanol content damages engine components.
The Supreme Court allows only a few petitions and it’s unclear whether this one will be heard.
USDA Outlook forecasts
U.S. seeded acreage
Corn 96.5 million acres, up 0.7 percent
Soybeans 77.5 million ac., up 0.4 percent
Wheat 56 million ac., up 0.5 percent
Hard red winter acreage is down slightly but is offset by an increase in soft red winter. Spring wheat and durum are expected to be down due to competition from corn and soybeans.
U.S. crop production
Corn 14.53 billion bushels, up almost 35 percent.
Soybeans 3.405 billion bu., up almost 13 percent.
Wheat 2.1 billion bu., down 7.4 percent.
Predicted average crop year price
Corn $4.80 per bushel, down 33.3 percent.
Soybeans $10.50, down 26.6 percent
Wheat $7, down 11.4 percent
Winnipeg ICE Futures (per tonne)
Canola Mar 13 $643.40, down $0.80 -0.12%
Canola May 13 $631.70, down $0.90 -0.14%
Canola Jul 13 $618.80, down $0.10 -0.02%
Canola Nov 13 $571.80, up $1.00 +0.18%
Milling Wheat Mar 13 $291.00, unchanged
Milling Wheat May 13 $294.00, unchanged
Milling Wheat Jul 13 $296.00, unchanged
Milling Wheat Oct 13 $296.00, unchanged
Durum Wheat Mar 13 $307.00, unchanged
Durum Wheat May 13 $311.00, unchanged
Durum Wheat Jul 13 $314.00, unchanged
Durum Wheat Oct 13 $299.30, unchanged
Barley Mar 13 $241.50, unchanged
Barley May 13 $242.50, unchanged
Barley Jul 13 $243.00, unchanged
Barley Oct 13 $243.00, unchanged
Chicago (per bushel)
Soybeans (P) Mar 13 $14.8775, up 5.0 cents +0.34%
Soybeans (P) May 13 $14.705, up 2.0 +0.14%
Soybeans (P) Jul 13 $14.545, down 1.75 -0.12%
Soybeans (P) Aug 13 $14.14, down 3.75 -0.26%
Soybeans (P) Sep 13 $13.35, down 8.0 -0.60%
Soybeans (P) Nov 13 $12.77, down 10.0 -0.78%
Corn (P) Mar 13 $6.9075, down 9.75 -1.39%
Corn (P) May 13 $6.855, down 10.75 -1.54%
Corn (P) Jul 13 $6.7325, down 9.54 -1.39%
Corn (P) Sep 13 $5.74, down 7.25 -1.25%
Corn (P) Dec 13 $5.54, down 7.5 -1.34%
Oats (P) Mar 13 $3.895, up 1.75 +0.45%
Oats (P) May 13 $3.875, down 1.0 -0.26%
Oats (P) Jul 13 $3.825, unchanged
Oats (P) Sep 13 $3.795, up 2.0 +0.53%
Oats (P) Dec 13 $3.7175, up 2.0 +0.54%
Minneapolis (per bushel)
Spring Wheat Mar 13 $8.065, down 14.25 cents -1.74%
Spring Wheat May 13 $8.1775, down 16.75 -2.01%
Spring Wheat Jul 13 $8.2625, down 16.75 -1.99%
Spring Wheat Sep 13 $8.3025, down 15.5 -1.83%
Spring Wheat Dec 13 $8.3775, down 14.75 -1.73%
The Bank of Canada noon rate for the loonie was 98.18 cents US, down two tenths of a cent from 98.40 the day before.
The U.S. buck was $1.0185 Cdn.
Crude oil in New York fell $2.38 to $ 92.84 per barrel.
In early tallies —
The Toronto Stock Exchange S&P/TSX composite index fell 74.08 points, or 0.58 percent, to 12,639.97.
The Dow Jones industrial average dropped 53.87 points, or 0.39 percent, to 13,873.67.
The Standard & Poor’s 500 Index dropped 10.30 points, or 0.68 percent, to 1,501.65.
The Nasdaq Composite Index fell 35.08 points, or 1.11 percent, to 3,129.33.
