Crop prices shot high Jan. 12 after bullish corn and soybean numbers in U.S. reports combined with a worldwide all-markets rally.
March canola futures at Winnipeg’s ICE Futures Canada exchange hit $13.50 per bushel, Minneapolis hard red spring wheat futures hit $8.77 per bu. and Chicago oats reached $3.94 per bu.
Corn and soybean March futures prices in Chicago flirted with limit-up levels, but closed beneath them, with corn ending the session up 24 cents at $6.08 per bu. and soybeans up 58 cents at $14.15.
Traders said the rally wasn’t solely because of lower corn and soybean production and ending stock estimates in U.S. Department of Agriculture reports released Jan. 12.
However, it took the momentum of a worldwide stock and commodity rally and compounded its impact.
“In a normal, calm, well-balanced market it would have been (an increase of) five, 10 cents tops,” said broker Ken Ball of Union Securities in Winnipeg.
“But we’re not in a normal, calm, well-balanced market. We’re in a fund-driven and definitely tight market.”
The USDA reduced U.S. and world ending stocks of corn and soybeans for the 2010-11 crop year, which will worry commercial users of the crop. Corn is projected to fall to 127 million tonnes of ending stocks and soybeans to 58 million tonnes.
However, the USDA projected higher ending stocks of wheat than traders expected.
Traders said wheat prices rose anyway because of the momentum of the soybean price surge. Corn also went along for the ride.
Concern about the general tightness of crop supplies and rising prices has begun to become a problem in many countries, with many analysts saying prices will have to rise substantially higher to “ration out” demand because there is not enough of most crops to meet demand.
Underpinning the bull run was a worldwide market rally that lifted most Asian, European and U.S. stock markets, as well as driving other commodity prices higher.
