Markets wrap: canola futures rise with help from falling loonie

Canola futures closed higher on Friday, lifted by a weak dollar as the loonie fell below US73 cents.

The loonie is under pressure as crude oil prices fall and as the market prepares for what is expected to be an interest rate hike in the United States next week.

Canola is also supported by strong domestic crush and exports.

January canola closed at $476.40, up $2.40 or 0.51 percent. March closed at $485.80, up $2.20 or 0.45 percent.

Over the week, January canola rose $2.20 a tonne compared to the close last Friday and March was up $2.80, an impressive show of resilience considering that the crop turned out much larger than expected.

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On the cash market, canola was trading from a low of $445.53 in northeastern Saskatchewn to as much as $451.49 in eastern Manitoba

A major support this week has been the weak Canadian dollar, which fell about two cents compared to where it was last Friday.

If not for the currency decline, canola would likely have fallen this week.

Soy oil, which canola closely tracks, fell 2.3 percent this week.

A lot of that decline happened today when December soy oil fell 1.36 percent, pressured by the rising U.S. dollar, weaker crude oil prices and rising expectations for Brazil’s soybean crop.

Previously, soy oil had been rising, partly on the expectation that a proposed change to a biofuel tax credit would limit the benefits of the credit to American produced biofuel and therefore reduce biodiesel imports from Argentina.

Before we look at U.S. markets, here are the canola demand numbers for this week.

The Canadian Oilseed Processors Association said members crushed 177,139 tonnes in week ending Dec. 9, up 3.6 percent from week before.

Total to date crush is 2.835 million tonnes, up 11 percent over last year at the same point.

The weaker Canadian dollar and the vegetable oil rally of the past month have improved crushers’ operating margins.

Weekly canola exports recorded by the Canadian Grain Commission were 224,400 tonnes (week before 240,300).

Total to date is 3.47 million tonnes, up 10 percent over last year.

Wheat exports are moving reasonably good. Weekly wheat exports were 333,900 tonnes (week before 242,500.)

Total wheat exported to date is 6.18 million tonnes, down just 0.2 percent from last year.

Durum exports this year have struggled.

Weekly durum exports 68,300 tonnes (week before 51,700).

Total to date 1.39 million down 29 percent from last year

Reuters reported Chicago soybean futures fell on Friday on pressure from signs that competition on the export market will rise in coming months when South America is expected to harvest a record crop.

Traders were awaiting news about a potential Argentine currency devaluation, which could trigger soybean sales by Argentine farmers and boost the amount of supplies available for overseas buyers.

Brazil‘s Conab raised its forecast for the country’s soybean crop to a record 102.5 million tonnes, which would add to the already ample global balance sheet.

While soy oil has shown strength in recent weeks, soy meal has strugged on plentiful supplies and demand woes.

For the week, front-month soybeans shed 3.7 percent, their biggest weekly loss since August. The front-month soymeal futures contract lost 4.5 percent this week, its seventh weekly loss in the last eight weeks.

Corn fell Friday also reflecting concern that developments in Argentina — elimination of an export tax and the possible devaluation of the peso — will push more corn onto the world market.

Corn for the week shed 1.4 percent, after rising by more than 3 percent in the previous week.

Wheat futures fell Friday as traders took profits following a short covering rally earlier this week.

However, Chicago March wheat still gained 1.2 percent this week.

Light crude oil nearby futures in New York were down $1.14 to US$35.62 per barrel. They fell more than 10 percent this week on over supply. OPEC countries pumped 31.7 million barrels per day in November, the highest monthly total since late 2008,

The number of rigs operating in the United States has fall to a little more than 5,000, down from more than 9,000 in the fall of 2014, however, that has had little impact so far on the production of U.S. crude oil production.

The Bank of Canada noon rate for the Canadian dollar was US73.01 cents, down about a half cent from 73.53 cents the previous trading day. The U.S. dollar at noon was C$1.36.96.

The weak oil price and jitters about how the market will react to the U.S. Federal Reserve’s expected interest rate hike next week hammer stock markets lower today.

The Toronto Stock Exchange’s S&P/TSX composite index closed down 226.64 points, or 1.74 percent, at 12,789.95, its weakest close in more than two years.

The Dow Jones industrial average fell 310.74 points, or 1.77 percent, to 17,264.01, the S&P 500 lost 39.92 points, or 1.95 percent, to 2,012.31 and the Nasdaq Composite dropped 111.71 points, or 2.21 percent, to 4,933.47.

For the week the TSX composite fell 4.4 percent, the S&P 500 dropped 3.8 percent, the Dow Jones Industrial Average slid 3.3 percent and the Nasdaq fell 4.1 percent.

Winnipeg ICE Futures Canada dollars per tonne

Canola Jan 2016 476.40 +2.40 +0.51%

Canola Mar 2016 485.80 +2.20 +0.45%

Canola May 2016 493.30 +1.80 +0.37%

Canola Jul 2016 498.60 +1.80 +0.36%

Canola Nov 2016 494.50 +0.70 +0.14%

Milling Wheat Dec 2015 237.00 -3.00 -1.25%

Milling Wheat Mar 2016 240.00 -3.00 -1.23%

Milling Wheat May 2016 243.00 -3.00 -1.22%

Durum Wheat Dec 2015 305.00 unch 0.00%

Durum Wheat Mar 2016 310.00 unch 0.00%

Durum Wheat May 2016 320.00 unch 0.00%

Barley Dec 2015 189.00 unch 0.00%

Barley Mar 2016 191.00 unch 0.00%

Barley May 2016 197.00 unch 0.00%

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

Chicago

Soybeans Jan 2016 870.75 -7.5 -0.85%

Soybeans Mar 2016 873.75 -7.5 -0.85%

Soybeans May 2016 880 -7.5 -0.85%

Soybeans Jul 2016 886.5 -7.5 -0.84%

Soybeans Aug 2016 888.5 -7.5 -0.84%

Soybeans Sep 2016 887.5 -7.75 -0.87%

Soybean Meal Dec 2015 272.2 -2 -0.73%

Soybean Meal Jan 2016 273.7 -0.1 -0.04%

Soybean Meal Mar 2016 275.5 -0.2 -0.07%

Soybean Oil Dec 2015 31.08 -0.43 -1.36%

Soybean Oil Jan 2016 31.36 -0.43 -1.35%

Soybean Oil Mar 2016 31.6 -0.43 -1.34%

Corn Dec 2015 373 -4.25 -1.13%

Corn Mar 2016 375.25 -4 -1.05%

Corn May 2016 380.25 -4 -1.04%

Corn Jul 2016 384.75 -4 -1.03%

Corn Sep 2016 388.5 -3.75 -0.96%

Oats Dec 2015 256.5 -5 -1.91%

Oats Mar 2016 232.5 -5 -2.11%

Oats May 2016 231 -4.25 -1.81%

Oats Jul 2016 232.25 -4 -1.69%

Oats Sep 2016 235 -2 -0.84%

Wheat Dec 2015 482.75 -1.75 -0.36%

Wheat Mar 2016 490.5 -5 -1.01%

Wheat May 2016 496.25 -4.75 -0.95%

Wheat Jul 2016 500.5 -4.5 -0.89%

Wheat Sep 2016 510.5 -4.25 -0.83%

Minneapolis

Spring Wheat Dec 2015 498.25 -30.75 -5.81%

Spring Wheat Mar 2016 507.75 -7.75 -1.50%

Spring Wheat May 2016 518.25 -7 -1.33%

Spring Wheat Jul 2016 527 -7.25 -1.36%

Spring Wheat Sep 2016 538.25 -7 -1.28%

Kansas

Hard Red Wheat Dec 2015 468.25 -7.5 -1.58%

Hard Red Wheat Mar 2016 482.5 -7.25 -1.48%

Hard Red Wheat May 2016 492.75 -7.25 -1.45%

Hard Red Wheat Jul 2016 502.75 -7.5 -1.47%

Hard Red Wheat Sep 2016 516.75 -7.5 -1.43%

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