So there was a frost that hit a substantial part of the Prairie canola zone and a simultaneous rally in soybean oil futures.
Which one was the more significant factor behind the canola futures rally Monday?
It is impossible answer that question, because the two factors are both bullish, both powerful and occurring on the same day.
“Even if we had no frost at all, canola might be trading pretty much where it is today,” said P.I. Financial broker Ken Ball.
“It (frost) is (a factor), but also it isn’t.”
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Traders suggested various reasons for the moves. Soybean oil’s rise was attributed by some to the Environmental Protection Agency’s raised targets for biodiesel production.
Some traders said the Monday wheat rally was due to short-covering after steep declines last week.
Canola’s gains were said to be due to either the frost that hit hundreds of thousands of acres of the eastern Prairies over the weekend, or to the soybean oil rally. Soy oil is a more relevant commodity for canola than soybeans because most of canola’s value comes from its oil, not its meal.
Ball said the frost easily justifies a bullish canola reaction. Projected 2015-16 year end stocks aren’t that comfortable, with Agriculture Canada forecasting 500.000 tonnes.
A reasonable frost-loss expectation makes that carryout situation risky.
“500,000 tonnes. That’s a big deal,” said Ball.
“You could lose a million tonnes of wheat now and the markets would say ‘So what?’ But canola’s a different story.
July canola rose 2.6 percent today and November climbed 2.37 percent. Chicago July soy oil climbed 3.54 percent.
Also, the Canadian dollar was weaker today.
That raises the interesting question of why didn’t canola rise more. Did the frost have any price impact at all, or could everything be attributed to soy oil?
Ball said the frost situation helps firm canola’s underpinnings. The soy oil rally might not last, since the soy complex fundamental situation hasn’t changed that much.
If soy oil slips, canola might not follow it down.
Soybeans were weak, traders claimed, because of weak export sales and fast progress with crop planting.
Forecasts for southern Alberta and southern Manitoba are for rain Tuesday but dryness is expected to prevail in most of the Prairies tomorrow and the rest of the week.
Light crude oil nearby futures in New York were down 10 cents to US$60.20 per barrel.
The Canadian dollar at noon was US79.68 cents, down from 80.22 cents the previous trading day. The U.S. dollar at noon was C$1.2550.
The Toronto Stock Exchange’s S&P/TSX composite index unofficially closed up 60.04 points, or 0.40 percent, at 15,074.13.
The Dow Jones industrial average rose 29.69 points, or 0.16 percent, to 18,040.37, the S&P 500 gained 4.34 points, or 0.21 percent, to 2,111.73 and the Nasdaq Composite added 12.90 points, or 0.25 percent, to 5,082.93.
Winnipeg ICE Futures Canada dollars per tonne
Canola Jul 2015 485.10 +12.30 +2.60%
Canola Nov 2015 481.30 +15.70 +3.37%
Canola Jan 2016 479.40 +15.00 +3.23%
Canola Mar 2016 477.30 +13.90 +3.00%
Canola May 2016 474.80 +12.40 +2.68%
Milling Wheat Jul 2015 210.00 +5.00 +2.44%
Milling Wheat Oct 2015 212.00 +5.00 +2.42%
Milling Wheat Dec 2015 212.00 +5.00 +2.42%
Durum Wheat Jul 2015 298.00 unch 0.00%
Durum Wheat Oct 2015 298.00 unch 0.00%
Barley Jul 2015 191.00 unch 0.00%
Barley Oct 2015 177.00 unch 0.00%
Barley Dec 2015 182.00 unch 0.00%
American crop prices in cents US/bushel, soybean meal in $US/short ton, soy oil in cents US/pound
Chicago
Soybeans Jul 2015 926 -8 -0.86%
Soybeans Aug 2015 913 -6.25 -0.68%
Soybeans Sep 2015 901.5 -6.25 -0.69%
Soybeans Nov 2015 901.25 -4.5 -0.50%
Soybeans Jan 2016 908.25 -4.5 -0.49%
Soybeans Mar 2016 913 -3.5 -0.38%
Soybean Meal Jul 2015 296.6 -9.1 -2.98%
Soybean Meal Aug 2015 291.3 -7.1 -2.38%
Soybean Meal Sep 2015 288.3 -6.7 -2.27%
Soybean Oil Jul 2015 34.51 +1.18 +3.54%
Soybean Oil Aug 2015 34.51 +1.16 +3.48%
Soybean Oil Sep 2015 34.52 +1.19 +3.57%
Corn Jul 2015 352.25 +0.75 +0.21%
Corn Sep 2015 358.25 +1 +0.28%
Corn Dec 2015 369 +1 +0.27%
Corn Mar 2016 379 +0.5 +0.13%
Corn May 2016 386 +0.5 +0.13%
Oats Jul 2015 244.5 +10.5 +4.49%
Oats Sep 2015 252.25 +10.5 +4.34%
Oats Dec 2015 259 +9.25 +3.70%
Oats Mar 2016 264.5 +8.75 +3.42%
Oats May 2016 271.25 +8.75 +3.33%
Wheat Jul 2015 493.75 +16.75 +3.51%
Wheat Sep 2015 498.75 +16.5 +3.42%
Wheat Dec 2015 512.75 +15.75 +3.17%
Wheat Mar 2016 526.75 +15.25 +2.98%
Wheat May 2016 535.75 +15.25 +2.93%
Minneapolis
Spring Wheat Jul 2015 548 +17.25 +3.25%
Spring Wheat Sep 2015 558 +16.5 +3.05%
Spring Wheat Dec 2015 571.5 +16 +2.88%
Spring Wheat Mar 2016 584.5 +15 +2.63%
Spring Wheat May 2016 593.5 +14.75 +2.55%
Kansas City
Hard Red Wheat Jul 2015 514.25 +15.5 +3.11%
Hard Red Wheat Sep 2015 523.25 +15.5 +3.05%
Hard Red Wheat Dec 2015 540 +15.25 +2.91%
Hard Red Wheat Mar 2016 553.25 +15.25 +2.83%
Hard Red Wheat May 2016 562 +15.25 +2.79%
