Canola price posts strongest rally in four months

Canola staged an independent rally Monday in light trade as U.S. crop futures drifted lower and the loonie rallied.

Most traded March jumped $9.80 to $447.70.

The canola rally was associated with funds taking profits before the end of the year by buying back short positions. Also, some the action was tied to thoughts that canola is undervalued compared to competing products.

Canola usually closely tracks soybean oil but had shown particular weakness since the final Statistics Canada crop production report issued Dec. 4, which pegged the canola crop at just shy of a record 18 million tonnes.

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From Nov. 1 to today, March canola futures have fallen 11.4 percent while March soybean oil has fallen only 7.3 percent. Before today’s rally, canola was down almost 13 percent from Nov. 1.

Canola had fallen sharply even as the Canadian dollar weakened.

The loonie has lost about two percent of its value since Nov. 1.

Today though, it rallied about a half cent relative to the U.S. buck.

Over the course of the year, canola futures values have dropped about 27 percent. The basis has also deteriorated greatly, from a positive position through to the end of the 2012-13 crop year to current basis bids roughly around -$40 to -$50 per tonne.

American crop markets fell today, pressure by beneficial rain in Argentina. That country had endured a summer heat wave with mostly dry conditions in the last week. However, over the weekend many areas received about 15 to forty millimeters of rain and more moisture was expected early this week before dry conditions return later this week. (For those of you battling the severe wind chill on the Prairies, Buenos Aires hit 35 C today and with the humidity felt like 43 C.)

Argentina’s Rosario grain exchange today forecast the soybean crop at a record 55 million tonnes, up from last year’s 48.3 million and USDA’s forecast for 54.5 million tonnes.

Brazil’s weather remains positive for crop production. It too is expecting a record soybean crop. Harvest has begun on early seeded soybeans in Brazil, which has extended sowing and harvesting seasons.

Chicago wheat fell today to $6 per bushel, its lowest level in 19 months. Minneapolis March wheat fell 4.5 cents to $6.325 a bushel

Argentina’s Rosario grain exchange today pegged the wheat crop there at 9.5 million tonnes, up 400,000 from its last forecast. U.S. weekly export inspections were about 13.4 million bu., shy of trade expectations for 16 million to 22 million bu.

The U.S. Plains, like Western Canada, are in the deep freeze, but the cold is not expected to hurt winter wheat.

Corn is down about 40 percent this year while wheat is down about 20 percent.

Winnipeg ICE Futures Canada dollars per tonne

Canola Jan 2014 438.20 +10.60 +2.48%

Canola Mar 2014 447.70 +9.80 +2.24%

Canola May 2014 456.80 +10.10 +2.26%

Canola Jul 2014 465.30 +10.20 +2.24%

Canola Nov 2014 478.70 +10.40 +2.22%

Milling Wheat Mar 2014 183.00 -1.00 -0.54%

Milling Wheat May 2014 191.00 -1.00 -0.52%

Milling Wheat Jul 2014 195.00 -1.00 -0.51%

Durum Wheat Mar 2014 243.00 unch 0.00%

Durum Wheat May 2014 247.00 unch 0.00%

Durum Wheat Jul 2014 248.00 unch 0.00%

Barley Mar 2014 146.00 unch 0.00%

Barley May 2014 148.00 unch 0.00%

Barley Jul 2014 148.00 unch 0.00%

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

Chicago

Soybeans Jan 2014 1328.25 -3.25 -0.24%

Soybeans Mar 2014 1308.75 -5 -0.38%

Soybeans May 2014 1292 -6.75 -0.52%

Soybeans Jul 2014 1278.75 -7.5 -0.58%

Soybeans Aug 2014 1247.25 -8.25 -0.66%

Soybeans Sep 2014 1187.75 -7.5 -0.63%

Soybean Meal Jan 2014 450.3 +4.6 +1.03%

Soybean Meal Mar 2014 427.1 -0.1 -0.02%

Soybean Meal May 2014 415.7 -1.6 -0.38%

Soybean Oil Jan 2014 38.62 -0.4 -1.03%

Soybean Oil Mar 2014 38.96 -0.39 -0.99%

Soybean Oil May 2014 39.34 -0.39 -0.98%

Corn Mar 2014 423.5 -4 -0.94%

Corn May 2014 431.75 -4 -0.92%

Corn Jul 2014 438.75 -4 -0.90%

Corn Sep 2014 444.75 -4.25 -0.95%

Corn Dec 2014 451 -4.25 -0.93%

Oats Mar 2014 353.75 -2.25 -0.63%

Oats May 2014 327.5 -0.75 -0.23%

Oats Jul 2014 321.25 -0.5 -0.16%

Oats Sep 2014 313.5 -0.5 -0.16%

Oats Dec 2014 304.5 -3.75 -1.22%

Wheat Mar 2014 600.5 -8.5 -1.40%

Wheat May 2014 607.5 -8.75 -1.42%

Wheat Jul 2014 612.75 -8.5 -1.37%

Wheat Sep 2014 622.25 -8.75 -1.39%

Wheat Dec 2014 636 -8 -1.24%

Minneapolis

Spring Wheat Mar 2014 630.25 -4.5 -0.71%

Spring Wheat May 2014 640.5 -4.25 -0.66%

Spring Wheat Jul 2014 651.5 -4 -0.61%

Spring Wheat Sep 2014 660.75 -4.5 -0.68%

Spring Wheat Dec 2014 673.75 -4.75 -0.70%

Kansas City

KCBT Red Wheat Mar 2014 635.75 -8.5 -1.32%

KCBT Red Wheat May 2014 638.25 -8.25 -1.28%

KCBT Red Wheat Jul 2014 640.25 -8.25 -1.27%

KCBT Red Wheat Sep 2014 653.25 -7 -1.06%

KCBT Red Wheat Dec 2014 667 -6 -0.89%

Light crude oil nearby futures in New York dropped $1.03 at $99.29 US per barrel.

The Canadian dollar at noon was 93.98 cents US, up from 93.48 cents the previous trading day. The U.S. dollar at noon was $1.0640 Cdn.

In light trade the TSX composite was trading down slightly in the afternoon, weighed down by weaker gold mining company shares. U.S. markets barely moved in light trade. U.S. markets had jumped higher since mid month on evidence that the economy is gathering strength and should maintain momentum in 2014 even as the U.S. Federal Reserve trims its stimulus program

The Toronto Stock Exchange’s S&P/TSX composite index is on track for a roughly nine percent gain for the year, a weak performance compared to the broad S&P 500 index’s 29 percent gain to all-time highs.

The Dow this year jumped 25.8 percent while the Nasdaq soared 37.7 percent.