Canola unable to resist drag created by weakening soy oil

Election jitters helped keep canola from slipping much Monday.

North American crop futures ended up in the red across the board, but canola was almost the strongest of the lot, slipping only slightly in nominal terms.

However, the weakness of soybean oil, which fell more than 1.6 percent, still helped take canola down a peg, while the slump in the Canadian dollar helped disguise the weakness.

“There are a lot of traders taking profit on the Canadian dollar ahead of the election results,” said Ken Ball of P.I. Financial in Winnipeg.

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The United States grain and oilseed markets are currently dominated by two factors, said Ryan Ettner, broker with Allendale Inc. in McHenry, Ill. Ettner said those are the absence of a trade deal with China and the ongoing United States government shutdown.

Currency speculators don’t like political risks to their positions, especially if those risks are hard to assess.

The market reaction to the Canadian election result is hard to predict because there could be 1) a Liberal minority government; 2) a Liberal majority; 3) a Conservative minority; 4) another result no one has thought about.

Because of that unpredictability, many who have had skin in the loonie game have taken it back.

It also encourages canola market speculators to become cautious because currency fluctuations play a big role in canola values, with some investors using canola as a surrogate for the loonie since other futures are denominated in U.S. dollars.

The weakness in U.S. crop futures is due in part to generally good production news around the world. The U.S. corn and soybean harvest are going well and beneficial rains have hit many winter wheat areas around the world.

Rain is forecast for Brazil, something that would alleviate much market anxiety.

Since good production news means bigger crops likely coming, the pressure on prices is of the downward sort.

“The news has all of a sudden swung all negative (for prices),” said Ball.

Big grain stocks and relatively weak world demand suggest U.S. crops will be hard to move this winter, pressuring prices.

There is still much harvest pressure on North American crop markets.

Even with recent hot, dry weather Australia is expected by some to have an about 24 million tonne wheat crop, which is a bit smaller than previously forecasted.

Contact ed.white@producer.com

Light crude oil nearby futures in New York were down $1.37 to US$45.89 per barrel.
The Canadian dollar at noon was US76.93 cents, down from 77.32 cents the previous trading day. The U.S. dollar at noon was C$1.2998.

Winnipeg ICE Futures Canada dollars per tonne
Canola Nov 2015   471.20   -1.40   -0.30%
Canola Jan 2016   476.20   -0.90   -0.19%
Canola Mar 2016   478.90   -0.90   -0.19%
Canola May 2016   479.60   -0.90   -0.19%
Canola Jul 2016   479.20   -0.80   -0.17%

Milling Wheat Dec 2015   225.00   -2.00   -0.88%
Milling Wheat Mar 2016   230.00   -2.00   -0.86%
Milling Wheat May 2016   234.00   -2.00   -0.85%

Durum Wheat Dec 2015   335.00   unch   0.00%
Durum Wheat Mar 2016   340.00   unch   0.00%
Durum Wheat May 2016   345.00   unch   0.00%

Barley Dec 2015   185.00   unch   0.00%
Barley Mar 2016   187.00   unch   0.00%
Barley May 2016   188.00   unch   0.00%

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

Chicago
Soybeans Nov 2015   891   -7.25   -0.81%
Soybeans Jan 2016   895.5   -6.5   -0.72%
Soybeans Mar 2016   898.5   -7   -0.77%
Soybeans May 2016   903   -6.5   -0.71%
Soybeans Jul 2016   908.25   -6.75   -0.74%

Soybeans Aug 2016 907.75 -6.25 -0.68%

Soybean Meal Dec 2015   310.8   -1.2   -0.38%
Soybean Meal Jan 2016   309.6   -0.8   -0.26%
Soybean Meal Mar 2016   307.5   -0.7   -0.23%

Soybean Oil Dec 2015   28.14   -0.46   -1.61%
Soybean Oil Jan 2016   28.43   -0.46   -1.59%
Soybean Oil Mar 2016   28.66   -0.44   -1.51%

Corn Dec 2015   373   -3.75   -1.00%
Corn Mar 2016   383.75   -4   -1.03%
Corn May 2016   390.5   -3.5   -0.89%
Corn Jul 2016   395.75   -3.5   -0.88%
Corn Sep 2016   393.75   -3.5   -0.88%

Oats Dec 2015   227   -3.75   -1.63%
Oats Mar 2016   229.5   -3   -1.29%
Oats May 2016   231.25   -3.25   -1.39%
Oats Jul 2016   235   -3.25   -1.36%
Oats Sep 2016   237.25   -3.25   -1.35%

Wheat Dec 2015   485.75   -6.5   -1.32%
Wheat Mar 2016   493.25   -6.75   -1.35%
Wheat May 2016   497.75   -7.25   -1.44%
Wheat Jul 2016   501   -7.5   -1.47%
Wheat Sep 2016   509.25   -8   -1.55%

Minneapolis
Spring Wheat Dec 2015   504.5   -6.75   -1.32%
Spring Wheat Mar 2016   518.5   -5.75   -1.10%
Spring Wheat May 2016   529.5   -6.75   -1.26%
Spring Wheat Jul 2016   540   -6.5   -1.19%

Spring Wheat Sep 2016 551.25 -4.75 -0.85%

Kansas City
Hard Red Wheat Dec 2015   472.25   -11.25   -2.33%
Hard Red Wheat Mar 2016   487.5   -11   -2.21%
Hard Red Wheat May 2016   497.5   -11   -2.16%
Hard Red Wheat Jul 2016   507.75   -10.75   -2.07%
Hard Red Wheat Sep 2016   521   -11   -2.07%