By Glen Hallick, MarketsFarm
WINNIPEG, Sept. 14 (MarketsFarm) – Intercontinental Exchange (ICE) canola futures were stronger at midday Tuesday, but those gains have moderated from the earlier sharp upticks that followed the release of Statistics Canada’s production update.
In its latest principal field crops report, Statistics Canada slashed 2021/22 canola production to about 12.8 million tonnes. That’s down from the federal agency’s August call of 14.7 million tonnes and 34.4 per cent less than the 19.5 million tonnes harvested in 2020/21.
A trader took strong umbrage over the gap between the August and September reports.
“There’s no rational reason that their assessment at the end of July is different than the one made at the end of August,” he stated. He noted the two reports were based on satellite imagery.
“Stat Canada has a real mess on its hands with the modelling process,” the trader continued.
However, he said the canola number wasn’t surprising as it was very close to what the markets expected. It’s the wheat number that to him was quite out of whack, as about 75 per cent of harvest is complete. He believes Statistics Canada may have under estimated this year’s wheat crop as yields, although not great, were better than expected.
The trader stressed that price rationing has been doing its job in keeping canola expensive and curtailing the demand for it.
“It’s in the stratosphere and is going to have to stay in the stratosphere for the foreseeable future,” he said.
As well, the trader believed there is a great amount of spread trading going on today in the canola market.
The Canadian dollar was relatively steady, with the loonie at 78.93 U.S. cents compared to Monday’s close of 78.98.
Approximately 28,050 canola contracts were traded as of 10:49 CDT.
Prices in Canadian dollars per metric tonne at 10:49 CDT:
Canola Nov 873.50 up 11.80
Jan 864.40 up 11.60
Mar 851.50 up 10.50
May 835.30 up 7.90