Statistics Canada surprised the market with a canola estimate below what many analysts had expected, and canola futures jumped two percent Thursday.
The agency pegged Canadian canola production at 13.36 million tonnes, of which the Prairies accounted for 13.2 million tonnes. The crop is a far cry from the optimistic predictions in early July of a 16 million tonne crop.
The crop forecast is now down about eight percent from last year and is the result of a 17.5 percent drop in average yield to 28.2 bushels per acre.
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As the harvest in southern Alberta presses on, a broker said that is one of the factors pulling feed prices lower in the region. Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, added that lower cattle numbers in feedlots, plentiful amounts of grass for cattle to graze and a lacklustre export market also weighed on feed prices.
StatsCan also revised its 2011 crop estimate upward to 14.493 million tonnes from 14.165 million in the July report.
November canola closed at $606.50, up $11.90 or 2.0 percent from the close on Wednesday. The close was off from the high hit after the Statistics Canada report was released.
There is a chance that the crop will be even smaller when StatsCan releases its final report in December, because the latest report is based on surveys of 11,657 farmers Sept. 4-11 and the big windstorms that scattered swaths were Sept. 11 and Sept. 18.
Demand for the crop, domestic and export, will be greater than supply so the price will have be at a level that rations demand.
However, some demand could migrate to cheaper palm oil, which is suffering an excess of supply.
Canola today was also supported by generally rising commodities.
The U.S. dollar was down as investors shifted money from safe treasuries into riskier products such as commodities. There was optimism from a U.S. jobs report. The official government employment report will be released Friday.
Also, the European Central Bank gave a comforting pledge that it would act to preserve the euro and buy European country bonds. This gave confidence that it would co-operate if Spain asks for a bailout.
Also, the U.S. Department of Agriculture said soybean export sales last week were the largest in three months. Included in that, China made its largest weekly purchase since early May.
Soybeans rose about 1.4 percent.
StatsCan said barley production is 8.591 million, up 10.8 percent from last year. However, the trade on average had expected 9.2 million tonnes and the July StatsCan estimate was 9.5 million. The Winnipeg ICE Futures Canada barley contract did not trade.
Although the StatsCan oats estimate came in close to pre report trade guesses, the Chicago December oats rose 7.5 cents or 2.06 percent to close at $3.7075 per bushel.
In a separate report, Saskatchewan Agriculture said harvest in the province is 97 percent complete, ahead of the five-year average of 83 percent for this time of year..
On a crop by crop basis, 98 percent of spring wheat and durum have been harvested, along with 93 percent of oats, barley 98 percent, 95 percent of canola and 74 percent of flax.
OTHER CROPS
Turning back to the StatsCan report, total wheat production is pegged at 26.73 million, up 5.8 percent from last year. That is down slightly from StatsCan’s August estimate. The trade as polled by Reuters, on average, was expecting 27.1 million.
Of that, spring wheat production is 18.64 million tonnes, up 3.4 percent from last year.
Durum is 4.398 million tonnes, up 5.4 percent. The trade, on average had expected 4.5 million tonnes. ICE Canada Future’s durum contract dipped slightly lower.
Winter wheat is 3.694 million tonnes, up 20.8 percent from last year.
Oats is 2.939 million, down two percent. The trade expected 2.8 million.
Peas are 2.743 million, up 9.7 percent from last year. The trade expected 2.9 million. StatsCan also revised its 2011 crop estimate upwards to 2.501 million tonnes from 2.116 million previously.
Flaxseed this year is 518,000 tonnes, up 40.7 percent. That was pretty much what the trade expected.
Lentil production is pegged at 1.323 million tonnes; down from last year’s 1.531 million.
Rye is 282,300 tonnes, up from 210,200 last year.
Mustard seed is pegged at 125,500 tonnes, up slightly from 124,800 last year.
Canary seed, (Sask only) is pegged at 118,800 tonnes, up from 128,600 last year.
Sunflower seed is seen at 76,600 tonnes, up from 19,800 tonnes last year when flooded land prevented seeding.
Winnipeg (per tonne)
Canola Nov 12 $606.50, up $11.90 +2.00%
Canola Jan 13 $604.50, up $9.00 +1.51%
Canola Mar 13 $600.70, up $8.60 +1.45%
Canola May 13 $592.70, up $10.00 +1.72%
Milling Wheat Oct 12 $293.30, down $1.00 -0.34%
Milling Wheat Dec 12 $298.50, down $1.00 -0.33%
Milling Wheat Mar 13 $308.00, down $1.00 -0.32%
Durum Wheat Oct 12 $309.00, down $0.30 -0.10%
Durum Wheat Dec 12 $313.50, down $0.30 -0.10%
Durum Wheat Mar 13 $320.10, down $0.30 -0.09%
Barley Oct 12 $245.00, unchanged
Barley Dec 12 $250.00, unchanged
Barley Mar 13 $253.00, unchanged
Chicago (per bushel)
Soybeans (P) Nov 12 $15.495 +17.75 +1.16%
Soybeans (P) Jan 13 $15.50 +17.75 +1.16%
Soybeans (P) Mar 13 $15.185, up 17.0 +1.13%
Soybeans (P) May 13 $14.70, up 5.75 +0.39%
Corn (P) Dec 12 $7.57, up 0.25 +0.03%
Corn (P) Mar 13 $7.5725, down 0.25 -0.03%
Corn (P) May 13 $7.5325, up 0.25 +0.03%
Oats (P) Dec 12 $3.7075, up 7.5 +2.06%
Oats (P) Mar 13 $3.7475, up 6.75 +1.83%
Oats (P) May 13 $3.74, up 5.5 +1.49%
Minneapolis (per bushel)
Spring Wheat Dec 12 $9.2625, down 3.5 -0.38%
Spring Wheat Mar 13 $9.3525, down 3.25 -0.35%
Spring Wheat May 13 $9.4225, down 2.75 -0.29%
Spring Wheat Jul 13 $9.4075, down 3.0 -0.32%
The Bank of Canada noon rate for the loonie is $1.0181 US, up from 1.0132 on Wednesday.
The U.S. buck is 98.22 cents Cdn.
Nearby crude oil in New York soared $3.57 to $91.71 per barrel, supported by the reassurances from the European central bank and on increased tension between Syria and Turkey.
TSX/S&P composite index closed up 88.21 points, or 0.7 percent, at 12,447.68
The Dow Jones industrial average gained 80.75 points, or 0.6 percent, to 13,575.36.
The S&P 500 rose 10.41 points, or 0.72 percent, to 1,461.40.
The Nasdaq Composite rose 14.23 points, or 0.45 percent, to end at 3,149.46.
The S&P 500 has climbed 16.2 percent so far this year. Given the uncertainty about U.S. economy, the debt crisis in Europe and slowing growth in China, the S&P gains could be viewed as overdone.
The TSX, with its greater exposure to commodity markets, is up only about four percent year to date.
