Improving Midwest weather pressures crop futures lower

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Published: June 14, 2011

Crop futures, including canola, fell Tuesday, weakened by improving crop conditions and weather in the U.S. Midwest and in Europe.

The July canola contract settled at $582.70 per tonne, down $6.30.

The crop and weather briefing from the Canadian Wheat Board was held after the markets closed. The report might lift wheat prices when trading resumes.

The CWB said between six and eight million acres of farmland will go unseeded across the Prairies. Wheat area, only slightly larger than last year, will be the second smallest since 1971 at 20.3 million acres, down 1.7 million acres from average. Durum area is pegged at 3.4 million acres. Seeded barley acres are projected at 6.7 million acres, although good weather in the next two weeks could see that number rise, the wheat board said.

Total all-wheat production on the Prairies is forecast at 20.3 million tonnes, including 3.8 million tonnes of durum, and barley production is forecast at 7.7 million tonnes.

Eastern Canada will likely add about another 2-2.5 million tonnes of wheat production to the total, but that is still much less than the U.S. Department of Agriculture June forecast for Canada of 26 million tonnes.

The board did not have an estimate for oilseed, pulse or special crop area.

The board also said crop planting in Western Canada is 86 percent complete, versus the norm of 96 percent.

Canola futures started the day on a defensive footing as palm oil and European rapeseed prices fell overnight. Late Monday the USDA’s weekly crop progress report showed corn and soybeans doing better than expected.

The stronger Canadian dollar also weighed on canola, as did slow crusher buying.

The biggest negative in crop markets was corn, which at one point was down the 30 cent limit on expectations that warmer weather in the Midwest will help the corn crop catch up after a late start. Also, there were concerns about weakening demand from ethanol producers.

In other news

Drought earlier this season likely cut the European Union’s 2011-12 rapeseed crop to 18.91 million tonnes from 20.56 million tonnes in 2010-11, said oilseeds analysts Oil World

The majority in the U.S. Senate voted against a proposal ending the federal ethanol tax credit and the tariff on ethanol imports before they are scheduled to expire at the end of year.

Winnipeg (per tonne)

Canola Jul 11       $582.70, down $6.30

Canola Nov 11        $585.40, down $6.40

Canola Jan 12        $592.10, down $6.30

Canola Mar 12        $598.40, down $6.00

The previous day’s best basis was $14 under the July contract according to ICE Futures Canada in Winnipeg.

The July contract’s 14-day Relative Strength Index was 49. The rule of thumb is an RSI of 30 indicates an over sold market and 70 indicates an over bought market.

Western Barley Jul 11        $205, unchanged

Chicago (per bushel)

Soybeans Jul 11        $13.68, down 14.75 cents

Soybeans Aug 11        $13.625, down 15.0

Soybeans Nov 11        $13.6375, down 13.0

Corn Jul 11        $7.555, down 27.0

Corn Dec 11        $6.85, down 19.5

Oats Jul 11        $3.875, down 13.5

Oats Dec 11        $4.05, down 4.0

Minneapolis (per bushel)

Spring Wheat Jul 11        $9.685, down 16.75 cents

Spring Wheat Sep 11        $9.18, down 17.25

Spring Wheat Dec 11        $9.15, down 19.25

Oil and stock markets were buoyed by data on China’s industrial output in May that revived hopes it will be able to control inflation without causing an economic contraction. U.S. retail sales fell in May, but not as much as feared.

Light crude oil nearby futures in New York rose $2.07 to $99.37 US per barrel

The Canadian dollar at noon was $1.0324 US, up from $1.0226 the previous trading day. The U.S. dollar at noon was 96.86 cents Cdn.

The Toronto Stock Exchange composite index closed up 158.10 points, or 1.22 percent, at 13,097.82.

The Standard and Poor’s 500 index was up 16.06 points, or 1.26 percent, at 1,287.89.

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