Canola posts weak response to bullish StatsCan report

By 
Ed White
Reading Time: 3 minutes

Published: August 21, 2014

A bullishly low canola production estimate from Statistics Canada wasn’t enough to save November canola futures from swooning beneath $420 per tonne Thursday.

That had some analysts scratching their heads and trying to figure out the significance of canola failing to rise with most other North American crop futures.

“I’m really surprised at the weakness in canola today,” said Errol Anderson of Pro Market Communications.

“The report was bullish, but the U.S. card trumps ours.”

That U.S. card is carrying an image of a huge U.S. soybean crop coming to market and a flaccid world vegetable oil market.

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Canola futures fell $4.60 per tonne, which is more than 10 cents per bushel, even though Statistics Canada predicted prairie farmers will grow only 13.9 million tonnes of the crop, far beneath 2013’s 17.96 and almost exactly 2012’s production-challenged 13.87.

“It’s not a good response,” said Anderson about canola futures failing to rise on bullish news.

“It suggests we haven’t seen the low yet.”

Chuck Penner of LeftField Commodity Research said the 13.9 number is close to what he was guessing StatsCan would find, but noted that most traders expect the agency to bump up the estimates in following reports. Right now most traders guess canola production will end up at around 14.5 million tonnes because StatsCan has a record of underestimating crops.

The StatsCan outlook was more bullish for oats and barley, both of which were verified to have the low stocks many in the marketplace believe those commodities will have. That should support feedgrain prices.

Penner said the flax number is odd because it shows no lost acreage to flooding and saturation. If Canada truly does produce 900,000 tonnes of flax, “the supplies will be heavier” than in recent years.

StatsCan is predicting spring wheat production of 19.97 million tonnes, 4.93 million tonnes of durum, 2.78 million tonnes of winter wheat, 7.16 million tonnes of barley, 3.56 million tonnes of peas, 2.64 million tonnes of oats and 1.93 million tonnes of lentils.

Among the acreage-volatile small crops, mustard is estimated at 222,300 tonnes, canaryseed at 145,700 tonnes, chickpeas at 142,500 and sunflowers at 78,200 tonnes.

U.S. stock markets were higher, with the Standard and Poors 500 at a record high, as continued evidence of a U.S. housing recovery was reported during the day.

Winnipeg ICE Futures Canada dollars per tonne

Canola Nov 14    419.60    -4.60    -1.08%

Canola Jan 15    424.90    -4.40    -1.02%
Canola Mar 15    430.00    -3.90    -0.90%
Canola May 15    430.10    -3.10    -0.72%
Canola Jul 15    429.50    -2.30    -0.53%

Milling Wheat Oct 14    202.00    +1.00    +0.50%
Milling Wheat Dec 14    207.00    +1.00    +0.49%
Milling Wheat Mar 15    215.00    +1.00    +0.47%

Durum Wheat Oct 14    250.00    unch    unch
Durum Wheat Dec 14    256.00    unch    unch
Durum Wheat Mar 15    257.00    unch    unch

Barley Oct 14    135.00    unch    unch
Barley Dec 14    137.00    unch    unch
Barley Mar 15    138.00    unch    unch

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

Chicago
Soybeans Sep 14    1136.25    +16.5    +1.47%
Soybeans Nov 14    1038.25    +0.25    +0.02%
Soybeans Jan 15    1045.25    -0.5    -0.05%
Soybeans Mar 15    1052.25    -0.25    -0.02%
Soybeans May 15    1057.75    -0.75    -0.07%

Soybean Meal Sep 14    413.8    +11.2    +2.78%
Soybean Meal Oct 14    356.9    +3.8    +1.08%
Soybean Meal Dec 14    346.5    +2.3    +0.67%

Soybean Oil Sep 14    32.78    -0.08    -0.24%
Soybean Oil Oct 14    32.86    -0.09    -0.27%
Soybean Oil Dec 14    33.11    -0.11    -0.33%

Corn Sep 14    362.25        +2.75    +0.76%
Corn Dec 14    369    +1.5    +0.41%
Corn Mar 15    381.75        +1.25    +0.33%

Corn May 15    389.75        +1    +0.26%
Corn Jul 15    396.5    +1.25    +0.32%

Oats Sep 14    376.25    +13.25    +3.65%
Oats Dec 14    348.25        +8.75    +2.58%
Oats Mar 15    331.5    +8    +2.47%
Oats May 15    322.5    +7    +2.22%
Oats Jul 15    318.25        +5.5    +1.76%

Wheat Sep 14    546.25    +6.75    +1.25%
Wheat Dec 14    555.5    +5.5    +1.00%
Wheat Mar 15    572.25        +3.5    +0.62%
Wheat May 15    582    +2    +0.34%
Wheat Jul 15    589.25        +2    +0.34%

Minneapolis
Spring Wheat Sep 14    615.75        +5.5    +0.90%
Spring Wheat Dec 14    623    +4.25    +0.69%
Spring Wheat Mar 15    634        +2.75    +0.44%
Spring Wheat May 15    642.75        +3    +0.47%
Spring Wheat Jul 15    650    +3.25    +0.50%

Kansas City
Hard Red Wheat Sep 14    622    +3.25    +0.53%
Hard Red Wheat Dec 14    632.25        +1.5    +0.24%
Hard Red Wheat Mar 15    640.25        +0.75    +0.12%
Hard Red Wheat May 15    643.75        unch    unch
Hard Red Wheat Jul 15    634    -0.25    -0.04%

Light crude oil nearby futures in New York rose 51 cents at $93.96 US per barrel.
The Canadian dollar at noon was 91.34 cents US, down from 91.37 cents the previous trading day. The U.S. dollar at noon was $1.0948 Cdn.

About the author

Ed White

Ed White

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