WINNIPEG, Manitoba--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 tons. That's down from the federal agency's August call of 14.7 million tons and 34.4% less than the 19.5 million tons 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% 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 11:49 EDT.
Prices in Canadian dollars per metric ton at 11:49 EDT:
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
Source: Commodity News Service Canada, firstname.lastname@example.org
(END) Dow Jones Newswires