Tighter U.S. soybean stocks lift canola

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Published: March 10, 2010

Winnipeg canola futures rose Wednesday after the U.S. Department of Agriculture tightened its forecast of year-end U.S. soybean stocks.

Crusher buying also supported canola.

Gains were limited on the USDA’s increased forecast of world soybean production.

March canola futures rose $2.50 to $388.40 per tonne on no trades. The March contract is in delivery mode and there is no open interest.

The most active May contract rose $2.50 to $387.40 on 7,030 trades. The previous day’s best basis widened to -$7.75 per tonne off the May contract in the par region, according to the Winnipeg ICE Futures daily report.

The 14-day Relative Strength Index for May canola was 44, according to BarChart.com. The rule of thumb is an RSI of 30 indicates an oversold market and 70 indicates overbought.

New crop November rose $2.40 to $397 per tonne on 940 trades.

The Canadian dollar at noon was 97.63 cents US, up from 97.55 cents at noon the previous trading day. The U.S. dollar at noon was $1.0243 Cdn.

The lightly traded Winnipeg March barley contract fell $1 to $150 per tonne with no trades. May fell $1 to $154 on no trades. There is almost no open interest in the barley contract with 20 positions in March, 11 in May and 10 in December.

May soybeans rose 10.5 cents to $9.58 US per bushel. November soybeans rose 7.75 cents to $9.3525 per bu.

March oats fell five cents to 2.13 per bu., pulled down by corn, which was depressed by the larger end stocks reported in the USDA report.

Light crude oil for April delivery rose 60 cents to $82.09 per barrel.

Analysts had expected that the USDA would at some point reduce its corn crop estimate because of the amount of crop unharvested last fall when snow and rain halted harvest.

USDA made the revision Wednesday by cutting 20 million bu., which was less than what analysts had expected.

At the same time, the USDA cut its export forecast by 100 million bu. The result was an increase to year-end stocks, rising to about 1.8 billion bu. from 1.72 billion in February.

The USDA also raised its forecast of world corn production to 803.69 million tonnes from 797.83 million in February.

It shaved U.S. soybean production slightly and increased both its domestic crush and export numbers. The changes caused a cut in ending stocks to 190 million bu. from 210 million bu. in February.

USDA raised its U.S. wheat year-end stocks number to slightly more than one billion bu. from 981 million in February.

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