Good commercial demand and funds buying back positions that they had previously sold at a profit drove Winnipeg canola nearby futures higher Thursday.
Canola was also supported by rising soybean prices, which were lifted by a good weekly export report and rising corn. Prices rose after China bought American corn for the first time in four years. Analysts expect China to conduct more corn business in the near future.
Stronger crude oil also supported canola.
Canola prices were strongly higher early in the day, but there was vigorous selling near the close.
Gains were limited by a stronger Canadian dollar and by rain in the western Prairies that had been dry. More rain is expected through the weekend and into next week. The improved prospect for a larger 2010 crop pressured November canola lower.
The Winnipeg May canola contract rose $1.30 to $382.60 per tonne on 2,053 trades.
The previous day’s best basis was -$5.85 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 54, according to BarChart.com. The rule of thumb is that an RSI of 30 indicates an oversold market and 70 indicates overbought.
July canola rose 10 cents to $388.30 on 10,606 trades.
New crop November fell 90 cents to $389.70 per tonne on 3,490 trades.
The Canadian dollar at noon was 99.46 cents US, up from 98.74 cents at noon the previous trading day. The U.S. dollar at noon was $1.0054 Cdn.
Winnipeg barley contracts were untraded. May was steady at $151.10 per tonne. There is no open interest in the May contract. July was steady at $145.50. December was steady at $150.
Chicago May soybeans rose three cents to $9.8575 US per bushel. November soybeans rose five cents to $9.705 per bu.
May oats rose 3.5 cents to $2.035 per bu.
Light crude oil for June delivery rose $1.95 to $85.17 per barrel. Crude was supported by the U.S. Federal Reserve’s comments about an improving economy and an intention to keep interest rates near zero for an extended period. Some traders believe oil is overpriced, given the comfortable level of stocks.
