Statistics Canada surprised traders Wednesday with a year end stocks report that put wheat and canola stocks higher than expected.
The news pressured Winnipeg canola futures lower. The stronger Canadian dollar, boosted by the Bank of Canada’s decision to hike interest rates, also pressured canola.
Statistics Canada put wheat stocks at 7.82 million tonnes as of July 31, above trade expectations of 6.8 million tonnes.
That was up 19.4 percent more than last year at the same time.
The increase was particularly influenced by the big jump in durum stocks, which climbed to 2.7 million tonnes from 1.9 million last year.
Canola stocks swelled to 2.12 million tonnes from 1.66 million last year, an increase of almost 28 percent. That was substantially more than what traders expected.
Statistics Canada said that the 2009 crop must have been larger than it thought and said it would revise the size of the 2009 crop by at least 476,500 tonnes in its October report.
Oat stocks shrank 23 percent to 1.17 million tonnes and pea stocks rose 79 percent to 795,000 tonnes.
Barley fell nine percent to 2.58 million tonnes.
The increase in wheat stocks is slightly negative to wheat prices, but the overwhelming issue in the wheat market is still the big drought in Russia, so the news won’t change the market outlook for wheat.
Nor is the increase in canola stocks a game changer. The price fell today, but with most of the crop still in the field and a forecast for cloudy, wet weather later this week, a risk premium remains in canola prices.
In Winnipeg, November canola fell $5.50 per tonne to $461 on 13,391 trades.
The January contract fell $6.40 to $465.80 on 883 trades.
The previous day’s best basis narrowed to $12.13 per tonne under the November contract in the par region, according to the Winnipeg ICE Futures daily report.
The 14-day Relative Strength Index for November was 51 according to BarChart.com. The rule of thumb is an RSI of 30 indicates an over sold market and 70 indicates an over bought market.
The Canadian dollar at noon was 96.5 cents US, up from 95.9 the previous trading day. The U.S. dollar at noon was $1.0359 Cdn.Â
The Bank of Canada raised its overnight interest rate by 25 basis points to one percent. The accompanying statement from the bank was less cautious about the economy than what some thought, leading to thoughts that it might continue to increase rates this year.
The TSX composite fell 0.5 percent to 12,042.32 and the S&P 500 rose 0.6 percent to 1098.87.
Winnipeg October barley was steady at $175. December was unchanged at $180.
Chicago September soybeans fell 2.5 cents to $10.4125 US per bushel. New-crop November fell 3.25 cents to $10.4875.
September oats rose one cent to $2.955 per bu. December oats rose one cents to $3.04 per bu.Â
In New York, crude oil for October delivery rose 58 cents to $74.67 per barrel.
