Grain and oilseed markets roared higher on Tuesday on thoughts that Wednesday’s USDA report might hold bullish surprises, such as lower than expected corn or soybean production estimates.
Oilseeds were also supported by talk that China in recent days bought eight shiploads of soybeans, mostly from the United States.
Support also came from a general feeling that the price declines of the past few weeks have been over done.
The gains today followed a strong rally on Monday in U.S. markets sparked by commitments by the leaders of Germany and France to do what was necessary to stabilize the Greek debt crisis.
November canola closed at $535.20, up $16.60 or 3.2 percent but it trailed the strong gains in the soybean market Monday and today.
• Large areas of Texas, Oklahoma and Kansas got the first major rain in more than a year over the weekend, reducing but not eliminating the worry over drought.
Rain also fell in South America helping Argentina’s wheat crop, which is about to be harvested, and prospects for soybean seeding in Brazil. Ukraine’s dry wheat areas also got weekend rain.
• While the moisture might have depressed wheat prices, they jumped higher late in the day on news that Russia is considering implementing an export tax on wheat shipments if exports exceed 23-24 million tonnes. The tax would try to ensure that the country maintains 15-16 million tonnes of wheat in year-end stocks.
Exports from Russia have moved at a brisk pace since it dropped its ban of grain exports July 1.
• The mid October USDA report last year set up a year long rally in grain prices when it surprised by the market by lowering its corn yeild estimate.
This year, analysts polled by Reuters, on average, expect USDA to lower its estimate of the corn crop by one percent from last month’s forecast, due to a decline in harvested acres. They were expecting the soy crop to be flat from a month ago, while stocks were seen rising 11 percent from the September forecast as high prices likely slowed demand.
Winnipeg (per tonne)
Canola Nov 11 $535.20, up $16.60 (+3.20%)
Canola Jan 12 $544.30, up $15.80 (+2.99%)
Canola Mar 12 $553.30, up $15.70 (+2.92%)
Canola May 12 $559.70, up $16.40 (+3.02%)
The previous day’s best basis was $22.25 under the November contract according to ICE Futures Canada in Winnipeg.
The November contract’s 14-day Relative Strength Index was 48. The rule of thumb is an RSI of 30 indicates an over sold and 70 is over bought.
Western Barley Oct 11 $210.00s unchanged
Chicago (per bushel)
Soybeans Nov 11 $12.355, up 58.0 cents (+4.93%)
Soybeans Jan 12 $12.4625, up 57.5 (+4.84%)
Soybeans Mar 12 $12.55-0, up 57.25 (+4.78%)
Corn Dec 11 $6.45, up 40.0 (+6.61%)
Corn Mar 12 $6.575, up 40.0 (+6.48%)
Oats Dec 11 $3.39, up 15.0 (+4.63%)
Oats Mar 12 $3.49, up 14.5 (+4.33%)
Minneapolis (per bushel)
Spring Wheat Dec 11 $9.365, up 2.25 cents (+0.24%)
Spring Wheat Mar 12 $8.6625, up 19.25 (+2.27%)
Spring Wheat May 12 $8.4625, up 22 (+2.67%)
Light crude oil nearby futures in New York rose 40 cents to $85.81 US per barrel.
The Canadian dollar at noon was 97.21 cents US, up from 96.82 cents the previous trading day. The U.S. dollar at noon was $1.0287 Cdn.
The Toronto Stock Exchange composite index unofficially ended up 287.19 points, or 1.63 percent, at 11,588.36.
The Standard & Poor’s 500 Index rose 0.73 points, or 0.06 percent, to 1,195.62.
