Canola prices rise with crop rally

Canola had more gains Friday, dragged higher by the continuing rally in Chicago soybeans.

November Winnipeg futures rose $8.10 per tonne to $644.80, or by 18 cents per bushel, to $14.63. January canola rose $7.40 to $647.10, keeping a small carry in the market. Soybean markets are sharply inverted, revealing strong commercial nearby demand.

Regardless of good Canadian growing conditions and prospects of a big, good crop only two months away, canola prices continue to rise as the attention of the Chicago futures markets shifts from toasted corn to the vulnerable soybean crop.

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Most of the damage that can be done to U.S. Midwest corn has already been done, but the U.S. soybean crop is just now entering its crucial potential-setting stage. Any damage to its yield potential in the next three weeks will be irreversible, as it was with corn over the last month.

Soybeans have very low ending stocks projected for 2012-13, so anything that reduces the crop below an expected average yield of 40 bushels per acre as a U.S. average creates real physical shortages of the crop at present levels of demand.

If the U.S. soybean crop falls beneath U.S. Department of Agriculture expectations, which is becoming the new expectation, demand will have to be rationed, and that is done through relatively increasing prices, causing some to stop using soybeans, use less soybeans or switch to competing products, such as canola.

All eyes will be on Midwest weather as this crucial period continues.

The past week has been a wild one in Chicago’s crop futures markets, with volatile trade revealing a twitchiness about the Midwest crop situation. November soybean futures prices soared almost a full dollar from Monday to Friday, reaching $16.87 at the close of Friday day trading.

The stunning inverse of soybean markets continues, with August futures closing Friday at $17.57 per bu., comfortably above the peaks of 2008.

Corn’s rise has continued, although not as sharply as soybeans this week, gaining about 50 cents per bushel. The once unlikely prospect of $8 corn is now a reality with September corn closing at $8.18 per bu. Friday and December futures tickling $8 with a $7.95 close Friday.

Stock markets slumped Friday, ending a three-day rally, as investors around the globe reawakened to the reality of worsening debt problems in Europe, a sluggish United States and sentiment in China turning ugly.

Winnipeg (per tonne)

Canola Nov 12 $644.80, up $8.10 +1.27%

Canola Jan 13 $647.10, up $7.40 +1.16%

Canola Mar 13 $647.00, up $7.40 +1.16%

Canola May 13 $641.90, up $5.40 +0.85%

Western Barley Oct 12 $257.00, up $2.00 +0.78%

Western Barley Dec 12 $262.00, up $2.00 +0.77%

Milling Wheat Oct 12 $334.50, up $7.00 +2.14%

Milling Wheat Dec 12 $342.00, up $7.00 +2.09%

Milling Wheat Mar 13 $352.00, up $7.00 +2.03%

Durum Wheat Oct 12 $339.00, unchanged

Durum Wheat Dec 12 $343.50, unchanged