Canola rises on export talk, South American dryness and short covering

Crop futures rose Tuesday on short covering and worries about dry weather in Argentina.

January canola closed at $506.30 per tonne, up $5.40.

There was talk in the market that China had bought additional shiploads of canola.

Farmers are hanging on to their canola and the tight supply of available stocks is also supporting the price.

The La Nina appears to be limiting rainfall in number three soybean producer Argentina and pockets of dryness are becoming a concern with a forecast for below normal moisture for the next few weeks.

Most areas of number two producer Brazil had below normal rainfall in November and many areas continue to have 65 to 80 percent of normal moisture this month.

Many analysts initially expected Brazil to produce a soybean crop close to last year’s 75 million tonnes, but the dryness is causing some to scale back projections

A strong gain in crude oil also supported oilseed prices. There was no clear reason for crude’s rally. Some support came from tension within OPEC about how to make room for the resumption of Libyan oil production now that its civil war has concluded. Saudi Arabia and other increased production to replace lost Libyan oil during the conflict.

• Chicago pit traders are upset that the CME plans to include electronic trade in the daily settlements. Currently the settlement is based exclusively on pit trade.

Winnipeg (per tonne)

Canola Jan 12 $506.30, up $5.40 (+1.08%)

Canola Mar 12 $506.80, up $5.40 (+1.08%)

Canola May 12 $509.30, up $5.10 (+1.01%)

Canola Jul 12 $511.80, up $4.80 (+0.95%)

The January contract’s 14-day Relative Strength Index was 45.

Western Barley Dec 11 $217.00 unchanged

Chicago (per bushel)

Soybeans Jan 12 $11.185, up 6.5 cents (+0.58%)

Soybeans Mar 12 $11.29, up 6.75 (+0.60%)

Soybeans May 12 $11.3975, up 7.0 (+0.62%)

Corn Dec 11 $5.885, up 3.0 (+0.51%)