Wittal: Trade’s uncertainties may drag on canola

Our online grain markets columnist Brian Wittal welcomes feedback and information on market conditions in your area, such as current offering prices, basis levels, trucking premiums and special crops contracts. Contact Brian today.

April 1 — Financial markets continue to show a rebound today and were able to hold onto those gains into the close. The Dow Jones closed up 152 points today.

The U.S. dollar finished down slightly; the Canadian dollar is up 0.06 cents to close at US79.43 cents.

Crude oil finished down $1.27, closing at US$48.39 per barrel.

Corn finished down eight to nine cents per bushel, beans are even to up oe cent a bushel and wheat is up three to down eight cents a bushel.

Canola is up $1-$5 per tonne and barley finished up 60 cents, closing at $142.80 per tonne.

The lower Canadian dollar and rumours that canola is undervalued compared to beans kept canola trading up slightly today. The drop in crude oil held canola advances to minimal levels.

Rumours out of the U.S. that the U.S. Department of Agriculture’s numbers in regards to soy acres are flawed and don’t add up have the trade thinking that acres will be larger than predicted.

Add to that the fact that Argentine officials reported today that they made an error in the production estimate for soybeans they announced yesterday. They now say that their total production is going to be closer to 42 million tonnes than the 37 million tonnes they previously announced.

These uncertainties had a negative effect on soybean futures today and this will carry through to canola as well, sooner rather than later.

Simple overreaction to the USDA report on Tuesday pushed grain futures higher than they should have probably gone, based on those numbers.

Now, with questions in regards to the validity of the numbers and corrections in Argentinean bean production, the markets are going to run back the other way unless some good news arrives that can help keep futures values supported at these levels.

Winnipeg’s Richardson International is predicting that its state-of-the-art canola crushing facility that it’s building at Yorkton, Sask. will be operational by the second quarter of 2010.

Site work started in 2008 and plans are in place to start construction this summer. The plant will be capable of processing 840,000 tonnes of canola a year. That’s 20,000 semi loads or 385 loads a week that will have to be delivered when the plant is running at full capacity.

That’s all for today. — Brian

— Brian Wittal has spent over 27 years in the grain industry, including as an elevator manager and producer services representative for Alberta Wheat Pool, a regional sales manager for AgPro Grain and farm business representative for the Canadian Wheat Board, where he helped design some of the new pricing programs. He also operates his own company providing marketing and risk management advice for Prairie grain producers. Brian’s daily commentaries focus on how domestic and world market conditions affect you directly as grain producers.

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Brian Wittal

Brian Wittal has 30 years of grain industry experience and currently offers market planning and marketing advice to farmers through his company Pro Com Marketing Ltd.

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