June 24, 2011
Canadian rapeseed drops on falling crude oil and worried investors
Plunging crude oil, generally weak grain markets, and a bearish Statistics Canada planting report drove rapeseed down to the lowest price in five weeks.
The Stats Can report put rapeseed seeded acreage at a record 19.8 million acres. However, the farmer surveys that are the basis of the report were done in the first half of May and likely do not fully reflect the amount of land that is flooded or too wet to seed.
The Canadian wheat estimates that between 6-8 million acres will not be seeded in Western Canada. The question is, which crops will see the biggest acreage drop.
Crop prices were generally hammered by liquidation in commodity markets as big funds continued to pull out of risk investments and park their money in the relative safety of US treasuries.
Grains are under pressure as reports from Ukraine and Russia indicate their crops will be better than expected and they will be able to export more than had been assumed.
Weather in the US Midwest is expected to be conducive to good crop development. Corn initially fell hard, but the nearby contract bounced back on bargain buying. Traders are anticipating USDA reports on acreage and stocks next Thursday (Jun 30).
Crude oil plunged after the International Energy Agency and the US government said they would release 60 million barrels of crude oil from strategic reserves. The move is to drive down high energy prices that countries are blaming for holding back their economies.
The Canadian Wheat Board's new crop 2011-12 Pool Return Outlook has wheat values that range from US$7 per tonne lower to up US$2. Durum values soared US$79 per tonne for the top three milling grades.
