Wheat prices rallied again on Tuesday, pulling canola in its wake.
Canola initially dipped in the morning on news that China had increased interest rates by 25 basis points to cool its inflation. However, as the day progressed, traders’ attentions turned to reviving U.S. corporate profits and strong demand for wheat.
This development, and regular domestic and export demand, added support for canola, which closed up $4.10 per tonne.
Traders will closely watch Wednesday’s USDA supply and demand report. They expect the department will tighten forecasts for year end U.S. grain and oilseed stocks.
Wheat markets remain concerned about the U.S. hard red winter wheat crop will cope with a new round of freezing weather. China’s dry winter wheat crop might get light precipitation this week.
In Winnipeg, March canola rose $4.10 to $612 per tonne on 11,034 trades.
May rose $3.70 to $620.60 on 5,823 trades.
The new crop November 2011 contract rose $6.60 to $599.40.
The previous day’s best basis was $12.50 under the March contract according to ICE Futures Canada in Winnipeg.
The March contract 14-day Relative Strength Index was 65. The rule of thumb is an RSI of 30 indicates an over sold market and 70 indicates an over bought market.
March barley futures were steady and untraded at $194. May and July were $205 per tonne.
Chicago March soybeans rose 9.75 cents to $14.3425 per bushel.
March corn fell one cent to $6.7375 per bu.
March oats fell 1.5 cents to $4.195 per bu.
March Minneapolis hard spring wheat rose 18.25 cents to $10.095 per bu.
In New York, crude oil for March delivery fell 54 cents to $86.94 US per barrel.
The Canadian dollar at noon was $1.0095 US, down from $1.0115 the previous trading day. The U.S. dollar at noon was 99.06 cents Cdn.
The Toronto Stock Exchange composite index rose 80.59 points to 13,892.52.
The Standard & Poor’s 500 Index rose 1.74 points to 1,320.79.
Traders did not act as negatively to the China interest rate news as in the past. Strong quarterly results by companies such as McDonald’s kept the mood upbeat. However, the China rate increase did weigh on crude oil prices.
