Canola jumps $13.80 on bullish USDA report

Canola futures jumped higher Thursday, pulled by a bullish USDA report that kept demand higher than expected, leading to a lower than expected ending stocks outlook.

November canola closed at $621.20 per tonne, up $13.80 or 2.27 percent, the highest since Sept. 21.

December corn gained almost five percent and November soybeans rose 1.7 percent.

Other factors in the market were:

• Malaysia’s government has agreed to lower its export tax on palm oil. The amount of the drop will be decided on Friday. This will likely help to reduce the record stockpiles of palm oil that are weighing down veg oil prices. Indonesia, the other major palm producer, cut its export tax on refined palm oil last year and has been winning market share from Malaysia.

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• Crude oil rose on worries over the growing friction between Turkey and Syria.

• The export picture for canola remains strong, providing price support.

• Rain is expected in northern Texas and southern Kansas Friday, which should help the winter wheat crop being seeded. Rain is not expected in the rest of Kansas or Nebraska. Rain on Saturday in the Midwest will slow corn and soybean harvest.

USDA surprises market

The biggest mover today was corn. USDA pegged the U.S. crop at 10.706 billion bushels, above the average analyst estimate of 10.601 billion. It estimated the yield at 122 bu. per acre, below the average trade guess of 122.884 bu. per acre.

However, USDA left the harvested acreage number unchanged.

Many analysts had assumed it would drop the acreage estimate to account for many abandoned fields due to drought.

That leaves the door open to further crop reductions in later USDA reports.

USDA said corn ending stocks for 2012-13 would fall to 619 million bu., below trade estimates for 648 million.

USDA got to that number by trimming the 2012-13 carry in stocks number from the September report and keeping domestic demand steady, although it trimmed its corn export number slightly.

USDA also lowered its world corn ending stocks figure to 117.27 million tonnes, below analysts’ average estimate of 121.32 million and well below the USDA’s forecast in September for 123.95 million.

Traders had expected an increased soybean production estimate to account for the positive effect of rain late in the growing season.

USDA estimated it at 2.860 billion bu., even more than the trade’s guess of 2.764 billion.

However, USDA believes that the increased production will easily be absorbed by larger export and domestic demand.

As a result, year end soybean stocks were pegged at 130 million bu., below expectations for 134 million.

USDA also brought out a U.S. canola estimate showing production has bounced back strongly from the small crop last year when excess moisture plagued production.

It pegged the U.S. crop at 1.127 million tonnes, up from 697,630 tonnes last year.

Wheat was supported by a small decrease in U.S. ending stocks. Production was little changed from the last report but the domestic feed use number increased leading to the 1.2 million tonne cut in U.S. stocks.

USDA also juggled its world wheat production numbers, lowering global production to about 653 million tonnes, down about 5.7 million tonnes.

The biggest change was a three million tonne reduction of the Australian crop to 23 million tonnes.

World ending stocks were lowered to 173 million from the September forecast of 176.71.

Stocks at the end of 2011-12 were 198.17 million tonnes.

Winnipeg (per tonne)

Canola Nov 12 $621.20, up $13.80 +2.27%

Canola Jan 13 $620.00, up $13.70 +2.26%

Canola Mar 13 $615.20, up $14.20 +2.36%

Canola May 13 $608.80, up $15.70 +2.65%

Milling Wheat Oct 12 $297.80, up $4.00 +1.36%

Milling Wheat Dec 12 $303.00, up $4.00 +1.34%

Milling Wheat Mar 13 $312.50, up $4.00 +1.30%

Durum Wheat Oct 12 $308.50, up $0.20 +0.06%

Durum Wheat Dec 12 $313.00, up $0.20 +0.06%

Durum Wheat Mar 13 $319.60, up $0.20 +0.06%

Barley Oct 12 $245.00, unchanged

Barley Dec 12 $250.00, unchanged

Barley Mar 13 $253.00, unchanged

Chicago (per bushel)

Soybeans (P) Nov 12 $15.485, up 25.25 cents +1.66%

Soybeans (P) Jan 13 $15.485, up 24.75 +1.62%

Soybeans (P) Mar 13 $15.2075, up 33.554 +2.25%

Soybeans (P) May 13 $14.7825, up 38.75 +2.69%

Corn (P) Dec 12 $7.7325, up 36.5 +4.95%

Corn (P) Mar 13 $7.7325, up 35.5 +4.81%

Corn (P) May 13 $7.6775, up 35.25 +4.81%

Oats (P) Dec 12 $3.885, up 5.0 +1.30%

Oats (P) Mar 13 $3.915, up 4.5 +1.16%

Oats (P) May 13 $3.90, up 1.5 +0.39%

Minneapolis (per bushel)

Spring Wheat Dec 12 $9.4675, up 13.0 cents +1.39%

Spring Wheat Mar 13 $9.53, up 12.5 +1.33%

Spring Wheat May 13 $9.57, up 10.25 +1.08%

Spring Wheat Jul 13 $9.5475, up 13.0 +1.38%

Crude oil in New York closed at $92.07, up 82 cents.

The Bank of Canada’s noon rate for the loonie is $1.0223 US, up slightly from $1.0218 the day before.

The U.S. buck is 97.82 cents Cdn.

A stronger than expected weekly U.S. employment measure supported stock markets initially but not all markets held on to their grains.

The Toronto Stock Exchange’s S&P/TSX composite index rose 21.53 points, or 0.18 percent, to close at 12,233.95.

The Dow Jones industrial average dipped 18.58 points, or 0.14 percent, to 13,326.39.

The S&P 500 edged up 0.28 point, or 0.02 percent, to 1,432.84. The Nasdaq Composite dipped 2.37 points, or 0.08 percent, to 3,049.41.

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