Canola, oilseeds rally on worry about Brazil weather, lower palm production

Canola posted its third consecutive daily gain, but the increase was minor.

American markets were back in business after the Martin Luther King Jr. holiday. Stronger soybeans and soy oil provided support to canola.

Corn also rose on short covering. Speculative investors have a near record cumulative short position in corn.

Wheat was higher through most of the day and Chicago closed with a modest gain but Kansas and Minneapolis closed a little lower.

The loonie edged slightly lower. The Bank of Canada meets Wednesday and might reduce its already low 0.5 percent interest rate.

Canola remains supported by the weak loonie and the record pace of domestic crush and exports.

The main market moving news in the market today affected oilseeds.

There was concern about heavy rain forecast in Brazil’s center-west grain belt this week.

The moisture will help late-planted fields but will interfere with more advanced crops that are ready to harvest.

Brazilian analyst Agroconsult trimmed its forecast for the country’s 2015-16 soybean crop to 99.2 million tonnes, from 100.6 million in October.

Soybean oil futures rose on and analyst’s forecast that the annual growth in palm oil production this year will likely fall short of the average, bringing with it the potential for higher prices.

Thomas Mielke, the editor of Oil World based in Germany, forecasted combined palm oil production rising 600,000 tonnes, well short of the average annual increase of 2.7 million.

“Palm oil has lost momentum, production saw a relatively slow growth last year and will see a further slowing down in 2016,” Mielke said. “This is not only due to weather factors … actually yields per tree are declining, which is quite alarming.”

The slower growth is a combination of a slight decrease in Malaysia and a smaller than expected increase in Indonesia.

Dry weather and haze from forest fires in 2015 were behind some of the slow down in production.

Mielke said there was the potential for the forecast to decline more.

“It is a tentative estimate, we may still be overestimating Malaysian and Indonesian production. A scenario is possible where world production of palm oil will only stagnate or be in decline slightly in calendar year 2016,” Mielke said.

Prices in Malaysia are currently about 2,500 ringgit or US$572 per tonne. Mielke said export prices in the region have the potential to rise by $50 to $100 by June if additional production problems occur.

If that happens, it would support soy oil prices and canola.

India’s 2015-16 pulse production is forecast at 17.2 to 17.5 million tonnes, steady to only slightly higher than last year, said the government’s food and consumer affairs minister Ram Vilas Paswan in a story in the India Times.

That is well short of consumption and the government is arranging for permission for more imports

In 2013-14 production was 19.25 million tonnes.

The area sown to winter pulses as of Jan. 15 is down 2.5 percent from the same time last year and wheat area is down five percent.

Until recent days crops were suffering from dry, warm weather but rain storms and cooler weather this week are starting to provide widespread coverage.

Varying exchange rates continue to benefit crop exporters other than the United States.

Since Dec. 1 here are how various currencies have changed relative to the U.S. dollar:

Russian rouble -15.1%

Canadian dollar -8

Australian dollar -5.4

Brazilian real -4.7

Euro +2.8

Light crude oil nearby futures in New York were down 96 cents to US$28.46 per barrel.

The Canadian dollar at noon was US68.90 cents, slightly down from 68.93 cents the previous trading day. The U.S. dollar at noon was C$1.4514.

North American stock markets closed slightly higher. China economic statistics today showed growth at 6.9 percent in 2015, down from 7.3 percent the year before and the slowest in 25 years. This sparked speculation that the government will bring in a new round of stimulus policies.

The Toronto Stock Exchange’s S&P/TSX composite index closed up 60.07 points, or 0.50 percent, at 12,002.24.

The Dow Jones industrial average rose 27.94 points, or 0.17 percent, to 16,016.02, the S&P 500 gained 1 point, or 0.05 percent, to 1,881.33 and the Nasdaq Composite dropped 11.47 points, or 0.26 percent, to 4,476.95

Winnipeg ICE Futures Canada dollars per tonne

Canola Mar 2016 487.70 +1.00 +0.21%

Canola May 2016 495.90 +1.60 +0.32%

Canola Jul 2016 499.80 +1.80 +0.36%

Canola Nov 2016 498.30 +2.50 +0.50%

Canola Jan 2017 500.40 +2.10 +0.42%

Milling Wheat Mar 2016 245.00 -1.00 -0.41%

Milling Wheat May 2016 247.00 -1.00 -0.40%

Milling Wheat Jul 2016 251.00 -1.00 -0.40%

Durum Wheat Mar 2016 334.00 unch 0.00%

Durum Wheat May 2016 342.00 unch 0.00%

Durum Wheat Jul 2016 342.00 unch 0.00%

Barley Mar 2016 185.00 +2.00 +1.09%

Barley May 2016 190.00 +2.00 +1.06%

Barley Jul 2016 192.00 +2.00 +1.05%

American crop prices in cents US/bushel, soybean meal in $US/short ton, soy oil in cents US/pound

Chicago

Soybeans Mar 2016 883.5 +4.5 +0.51%

Soybeans May 2016 883 +4.25 +0.48%

Soybeans Jul 2016 888 +4.25 +0.48%

Soybeans Aug 2016 889 +3.5 +0.40%

Soybeans Sep 2016 887.25 +3.25 +0.37%

Soybeans Nov 2016 888.5 +3.25 +0.37%

Soybean Meal Mar 2016 271.3 +0.6 +0.22%

Soybean Meal May 2016 273.8 +0.2 +0.07%

Soybean Meal Jul 2016 276.6 -0.1 -0.04%

Soybean Oil Mar 2016 30.03 +0.38 +1.28%

Soybean Oil May 2016 30.24 +0.38 +1.27%

Soybean Oil Jul 2016 30.46 +0.36 +1.20%

Corn Mar 2016 367.75 +4.5 +1.24%

Corn May 2016 372 +4.5 +1.22%

Corn Jul 2016 377 +4.25 +1.14%

Corn Sep 2016 381.75 +4.25 +1.13%

Corn Dec 2016 389.5 +4.25 +1.10%

Oats Mar 2016 207.5 +8.75 +4.40%

Oats May 2016 208.25 +9.5 +4.78%

Oats Jul 2016 214.25 +10.25 +5.02%

Oats Sep 2016 219.75 +10.25 +4.89%

Oats Dec 2016 216.25 +10.25 +4.98%

Wheat Mar 2016 474.5 +0.75 +0.16%

Wheat May 2016 479 +0.5 +0.10%

Wheat Jul 2016 485 +0.5 +0.10%

Wheat Sep 2016 493.75 +0.75 +0.15%

Wheat Dec 2016 507.25 +0.5 +0.10%

Minneapolis

Spring Wheat Mar 2016 496.25 -1 -0.20%

Spring Wheat May 2016 502.25 -1.25 -0.25%

Spring Wheat Jul 2016 508.75 -1.75 -0.34%

Spring Wheat Sep 2016 518.75 -2 -0.38%

Spring Wheat Dec 2016 534 -1.25 -0.23%

Kansas City

Hard Red Wheat Mar 2016 472.75 -1.25 -0.26%

Hard Red Wheat May 2016 482.75 -1.25 -0.26%

Hard Red Wheat Jul 2016 492.5 -1 -0.20%

Hard Red Wheat Sep 2016 505.5 -1 -0.20%

Hard Red Wheat Dec 2016 524 -1.5 -0.29%

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