Canola futures prices reluctantly followed soybeans higher Thursday as a crazy day of trading rocked other crops yet again.
November canola rose $4.20 to $636.70 ($14.44 per bushel) and January rose $4.10 to $639.70.
The U.S. Midwest drought has unleashed a torrent of greed and fear in the crop markets and they are being buffeted by constant reexaminations of yield expectations, demand destruction, rainfall forecasts and drought measurements about the Midwestern situation, which gets worse with every day of dryness and heat. The drought has become mainstream news, and a host of industries are anxiously examining what the suddenly unsure supply situation about corn and soybeans will mean for them.
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Canola is mostly a bystander to the wild rally in U.S. corn, soybeans and wheat, but generally follows soybean and soy oil prices because it can be substituted for those products by some users. It does not, however, follow in lockstep and that was seen Thursday.
Canola growing conditions are still generally good and a good crop still appears to be coming, so even with soybeans hitting all time record highs in the overnight session Wednesday-Thursday, canola opened weakly and didn’t follow soybeans’ early gains. It picked up later as the soybean train left the station, but only after an earlier sudden selloff that rattled traders’ nerves was reversed and soybeans closed up well on the day, closing the day session up 43 cents to $16.52 for November. The August contract soared another 50 cents higher to $17.33.
November canola values are at contract highs, but still not convincingly above the resistance level, which has recently held back their ascent. Failing to break above these levels will worry traders.
Trade in Chicago soybeans, wheat and corn was explosive and inexplicable, as violent spirits led soybeans into early strong gains following record prices being hit overnight, then falling sharply, then rebounding to end with November soybeans up 32 cents and August soybeans up 50 cents, exacerbating an already enormous inversion as commercial users grab for physical stocks.
An incredible $1.26 inversion exists now between the November soybean contract and the March 2013 contract, showing traders’ expectations of a good South American crop ending the supply shortness that most expect to follow the beginning of the new crop year and the drought-stunted crop. May soybean futures are another 76 cents cheaper, at $14.50 per bushel compared to $16.52 for November.
Canola, which appears to have good crops coming, still has a small amount of carry in the market, with November futures at $636.70 and March 2013 at $639.60.
Stock markets and commodity markets were in cheery moods Thursday, regardless of generally bad economic news.
Winnipeg (per tonne)
Canola Nov 12 $636.70, up $4.20 +0.66%
Canola Jan 13 $639.70, up $4.10 +0.65%
Canola Mar 13 $639.60, up $4.60 +0.72%
Canola May 13 $636.50, up $4.40 +0.70%
Western Barley Oct 12 $255.00, unchanged
Western Barley Dec 12 $260.00, unchanged
Milling Wheat Oct 12 $327.50, up $10.00 +3.15%
Milling Wheat Dec 12 $335.00, up $10.00 +3.08%
Milling Wheat Mar 13 $345.00, up $10.00 +2.99%
Durum Wheat Oct 12 $339.00, up $8.50 +2.57%
Durum Wheat Dec 12 $343.50, up $8.50 +2.54%
Durum Wheat Mar 13 $350.10, up $8.50 +2.49%
Barley Oct 12 $264.60, unchanged
Barley Dec 12 $269.60, unchanged
Barley Mar 13 $272.60, unchanged
Chicago (per bushel)
Soybeans (P) Aug 12 $17.3375, up 50.25 cents +2.98%
Soybeans (P) Sep 12 $16.9125, up 43.25 +2.62%
Soybeans (P) Nov 12 $16.5225, up 32.25 +1.99%
Soybeans (P) Jan 13 $16.3400, up 22.75 +1.41%
Corn (P) Sep 12 $8.0775, up 12.75
Corn (P) Dec 12 $7.7850, down 5.75
Corn (P) Mar 13 $7.7050, down 12.75 -1.63%
Oats (P) Sep 12 $3.8350, up 3.50 +0.92%
Oats (P) Dec 12 $3.8700, up 3.50 +0.91%
Oats (P) Mar 13 $3.9275, up 4.50 +1.16%
Minneapolis (per bushel)
Spring Wheat Sep 12 $10.2200, up 24.00 cents +2.40%
Spring Wheat Dec 12 $10.2025, up 24.50 +2.46%
Spring Wheat Mar 13 $10.1675, up 18.25 +1.83%
Spring Wheat May 13 $10.1000, up 13.25 +1.33%
The previous day’s best canola basis was $10 over the November contract according to ICE Futures Canada in Winnipeg.
Light crude oil nearby futures in New York rose $2.79 at $92.66 US per barrel.
The Canadian dollar at noon was 99.24 cents US, up from 98.89 cents the previous trading day. The U.S. dollar at noon was $1.0077 Cdn.
