Canola continues to make up lost ground

Canola continued its multi-day rebound on a day when everything in the grains was green.

November canola clambered back over the $500 mark, closing up $8.40 per tonne at $502.60 and January maintaining its carry at $508.50.

That echoed gains in soybean oil and soybeans, the leaders of the grains complex.

Markets have been spooked by recent weather forecasts that show little rain in coming days for the bulk of the Midwest soybean belt. Soybeans need good rains to fill pods and while vegetative growth is excellent in most areas, the plants need moisture to pump up bean size.

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Canola too is worrying traders, but the concern there is more with crop lateness and the possibility of frost.

Broker Errol Anderson of Pro Market Communications in Calgary said canola and soybeans have also rebounded because speculative commodity funds went too-far short and are racing to cover their exposure after the U.S. Department of Agriculture Aug. 12 undermined the funds’ bearish thesis by reducing yields.

In canola, the sell off had been so great in July and early August that the recovery has been equally violent.

“It’s just too far, too fast for a harvest that isn’t here yet,” said Anderson about the market recoil from the sub-$480 prices that were recently hit.

“It’s possible we’ll go to the $510-$515 area (on this short-covering), but beyond that we’ll need help,” said Anderson.

The grains were the second highest gaining commodity class today, with only metals doing better. Most commodities rose.

It was a brutal day in the equity markets, with most stock markets falling. Some of the losses were due to negative earnings guidance from some major companies, but much was also due to the wacky reaction of contemporary markets to economic news.

Signs of improving economic performance in the U.S. spooked some investors with the spectre of the U.S. Federal Reserve beginning to taper its debt purchases and set the stage for an eventual increase in interest rates.

While that would be a symptom of better times in the real economy, it would undermine the strength of some investments that rely upon ultra-low interest rates for their returns.

ICE Futures Canada, dollars per tonne
Canola Nov 2013   502.60   +8.40   +1.70%
Canola Jan 2014   508.50   +8.50   +1.70%
Canola Mar 2014   514.40   +8.70   +1.72%
Canola May 2014   519.90   +8.10   +1.58%
Canola Jul 2014   525.20   +7.70   +1.49%

Milling Wheat Oct 2013   252.00   +1.00   +0.40%
Milling Wheat Dec 2013   257.00   +1.00   +0.39%
Milling Wheat Mar 2014   262.00   +1.00   +0.38%

Durum Wheat Oct 2013   286.00   unch   0.00%
Durum Wheat Dec 2013   290.00   unch   0.00%
Durum Wheat Mar 2014   300.00   unch   0.00%

Barley Oct 2013   189.00   unch   0.00%
Barley Dec 2013   194.00   unch   0.00%
Barley Mar 2014   194.00   unch   0.00%

American crops in cents US per bushel, soybean meal in $US per short ton and soybean oil in cents US per pound

Chicago
Soybeans Sep 2013   1288.25   +18.75   +1.48%
Soybeans Nov 2013   1265.5   +26.5   +2.14%
Soybeans Jan 2014   1268.25   +25   +2.01%
Soybeans Mar 2014   1260   +20.25   +1.63%
Soybeans May 2014   1246.25   +13.25   +1.07%
Soybeans Jul 2014   1248.5   +12   +0.97%

Soybean Meal Sep 2013   409.8   +1.9   +0.47%
Soybean Meal Oct 2013   391.4   +8.8   +2.30%
Soybean Meal Dec 2013   387.6   +8.5   +2.24%

Soybean Oil Sep 2013   43.12   +0.78   +1.84%
Soybean Oil Oct 2013   43.22   +0.82   +1.93%
Soybean Oil Dec 2013   43.45   +0.82   +1.92%

Corn Sep 2013   481.5   +16.75   +3.60%
Corn Dec 2013   472.25   +17   +3.73%
Corn Mar 2014   484.5   +16.25   +3.47%
Corn May 2014   492.5   +16   +3.36%
Corn Jul 2014   499   +16.25   +3.37%

Oats Sep 2013   382.75   +17   +4.65%
Oats Dec 2013   331.25   +2.75   +0.84%
Oats Mar 2014   335.25   +2.75   +0.83%
Oats May 2014   335.5   +2.75   +0.83%
Oats Jul 2014   339.75   +2.75   +0.82%

Wheat Sep 2013 637.5 +7 +1.11%
Wheat Dec 2013 649.5 +6.75 +1.05%

Wheat Mar 2014   661.75   +6.25   +0.95%
Wheat May 2014   669.25   +5.75   +0.87%
Wheat Jul 2014   667.25   +5.75   +0.87%

Minneapolis
Spring Wheat Sep 2013   739.5   +3.5   +0.48%
Spring Wheat Dec 2013   743   +2.75   +0.37%
Spring Wheat Mar 2014   755   +3.25   +0.43%
Spring Wheat May 2014   762.25   +4   +0.53%
Spring Wheat Jul 2014   764.75   +2   +0.26%

Kansas City
KCBT Red Wheat Sep 2013   703   +4.25   +0.61%
KCBT Red Wheat Dec 2013   706.25   +3.25   +0.46%
KCBT Red Wheat Mar 2014   713.25   +2.25   +0.32%
KCBT Red Wheat May 2014   716.75   +3   +0.42%
KCBT Red Wheat Jul 2014   706.25   +7.25   +1.04%

Light crude oil nearby futures in New York rose 48.0 cents at $107.33 US per barrel.

The Bank of Canada rate for the loonie at noon was 96.71 cents US, down from 96.88 cents the previous trading day. The U.S. dollar at noon was $1.0340 Cdn.