Concern about yields and week loonie push canola higher

Canola closed higher Thursday supported by concerns about disappointing yields, a weaker loonie and rising soybeans, which posted a record high.

Canola and soybeans showed a little weakness early in trading as traders took profits after Wednesday’s gains. However, both oilseeds then climbed and soybeans have posted a new all time high. September soybeans reached $17.8075 per bushel, but both canola and soybeans closed down from the day’s peaks.

Corn and wheat were little changed. SovEcon again reduced its forecast of the Russian wheat harvest, cutting it to 38 million tonnes from 39 million last week. Russian officials meet Friday to discuss the need for limits on exports.

Read Also

U.S. grains: Soybeans rise on China demand hopes; corn and wheat rebound

Chicago Board of Trade soybean, corn and wheat futures rose on Monday on signs of progress towards the end of a record-long U.S. government shutdown, along with expectations of a revival of U.S. soybean exports to China, analysts said.

Reuters surveyed 10 international traders and analysts about the Russian meeting. Five saw an export tax as likely with other possibilities including quotas or even an outright ban. Six of the 10 expected export curbs to begin in October.

The November canola contract closed at $635.70, up $2.20.

Gains in canola were limited by generally good harvest conditions and an expectation that farmers will soon be delivering a lot of canola to elevators, requiring commercial hedges. There is talk that Canadian canola exporters are planning a record export program in the fall.

• But there are many reports that yields are disappointing.

Saskatchewan Agriculture reported today that 21 percent of the 2012 crop is combined and 27 percent is swathed or ready to straight combine.

Canola is 14 percent combines. Many areas report disappointing yields and the east-central area appears to be the worst.

The five-year (2007-11) provincial average for this time of year is 17 percent combined and 24 percent swathed or ready to straight combine.

Last year at this time, 21 percent had been combined and 27 percent swathed or ready to straight combine.

The report says that wind and hail damaged crops in the past week. Heavy rain in northern areas last weekend complicated harvest with fields too soft to get equipment in.

• The trade is uncertain about the amount of damage tropical storm Isaac is doing in the southern U.S. Heavy rain is flooding some fields and strong winds could knock corn stalks over. However, the moisture will be good for fields where winter wheat will sown in the next few weeks.

• Speculation is growing that U.S. Federal Reserve chair Ben Bernanke will not announced new stimulus on Friday. The Fed on Wednesday released data showing gradual improvement in the U.S. economy, reducing the need for the bank to stoke the economic fires.

Stimulus, which basically would be a process that creates money and funnels it into the economy, would weaken the U.S. dollar. If there is no stimulus, then the U.S. dollar would firm against other currencies.

• Wheat areas in Western Australia that have been dry are expecting light rain on Friday. There is a good chance of rain Sept 4-5.

• Richardson International said today it had loaded a ship full of wheat at Churchill, the first vessel to be loaded and shipped since the end of the CWB monopoly. The ship is bound for Colombia.

Richardson said it has plans for various grains and oilseed shipments for Churchill this season.

Winnipeg (per tonne)

Canola Nov 12 $635.70, up $2.20 +0.35%

Canola Jan 13 $639.20, up $1.80 +0.28%

Canola Mar 13 $639.50, up $1.20 +0.19%

Canola May 13 $628.00, up $1.00 +0.16%

Milling Wheat Oct 12 $304.00, up $2.20 +0.73%

Milling Wheat Dec 12 $311.50, up $2.50 +0.81%

Milling Wheat Mar 13 $321.00, up $2.30 +0.72%

Durum Wheat Oct 12 $300.60, up $0.10 +0.03%

Durum Wheat Dec 12 $305.10, up $0.10 +0.03%

Durum Wheat Mar 13 $311.70, up $0.10 +0.03%