Canola futures gained after officials downgraded their estimate for Canada’s harvest of the oilseed this year – but an upgrade in the oat crop to a 51-year high sent futures in the grain plunging.
Winnipeg canola futures for March stood up 2.5% at Can$832.80 per tonne in late deals on Friday, on course for their first winning week in four.
The gains, which tally with a positive GrainPriceNews call on the oilseed a week ago, followed Statistics Canada data showing this year’s Canadian canola crop at 18.17m tonnes this year – 925,000 tonnes of the estimate that officials had pencilled in.
Investors had expected StatsCan to unveil a slight upgrade in their canola output estimate, to 19.2m tonnes, according to a Reuters poll.
‘Dry soil conditions persisted’
“Despite the general improvement” in growing conditions compared with last year, when drought sent yields tumbling “dry soil conditions persisted in many parts of the Prairies, affecting growing conditions in those regions,” StatsCan said.
Indeed, in the top growing province of Saskatchewan, “conditions in the south-western and west-central parts of the province remained dry, possibly impacting… production” of canola.
Canada’s wheat crop shrank too amid the dryness, with StatsCan pegging the harvest at 33.82m tonnes, nearly 900,000 tonnes below the previous estimate, and 1m tonnes below the market’s expectation.
Durum accounted for the bulk of the revision, with a cut of 670,000 tonnes to 5.44m tonnes in the harvest estimate, with the key spring wheat crop receiving a smaller downgrade.
Oat futures plunge
Estimates for many other crops were also lowered unexpectedly, with soybeans attracting a 1.27m-tonne downgrade to 5.23m tonnes in the harvest estimate.
However, barley and oats proved exceptions, attracting upgrades of 590,000 tonnes and 530,000 tonnes respectively.
The oat harvest, at 5.23m tonnes, was now pegged at its highest since 1971.
Chicago oat futures for March stood 5.6% lower at $3.57 ½ a bushel in late trading.
From GrainPriceNews earlier on Friday: ANALYSIS – Canada’s wheat shipments hitting the mark – but not canola ones