Crop futures have strong day as investors price in risk premium

Canola futures and prices for other crops rallied Wednesday, fuelled by short covering and investors putting a risk premium into the market as the U.S. seeding season begins.

The big mover today were U.S. corn futures, which climbed about three percent, their biggest one-day rally of 2016, on short-covering and risk management.

“Corn buying is merely positioning for potential weather problems in the months ahead,” Arlan Suderman, chief commodities economist with INTL FCStone, said in a note to clients.

Wheat and soybeans also charged higher, with soy buoyed by chart-based buying and data showing strong demand from China.

VIDEO: Canada’s agricultural markets update – April 13, 2016

The U.S. Department of Agriculture has projected that U.S. farmers will expand corn plantings in 2016 by six percent, to 93.6 million acres. But with new-crop November soybean futures topping $9.50 a bushel, up 90 cents from early March when the USDA survey was done, some analysts think corn acres might fall short of the USDA’s forecast.

Wheat futures advanced despite forecasts calling for much-needed rains later this week in portions of the southern U.S. Plains.

Argentina’s farmers will likely seed 25 percent more wheat acres this coming season to take advantage of improved returns following the new government’s scraping of export taxes.

Soybeans were climbing for a fourth straight session, gaining technical momentum as the May contract set an eight-month high.

Fresh data from China added support. China, the world’s biggest soy buyer, imported 6.1 million tonnes of the oilseed in March, up 35.3 percent from February and up 36 percent from a year earlier, customs figures showed.

The figures eased market concerns that reduced economic growth in China could cut the country’s massive soybean purchases.

Excessive rain in Argentina’s crop belt added to bullish sentiment.

Heavy rain has damaged Argentina’s soybean harvest and could hurt more of the crop if wet weather continues into next week as expected.

Agriculture Canada ‘s updated monthly supply and demand report for April increased its forecast for canola exports to reflect the strong pace to date. It raised its export number by 500,000 tonnes to 10 million and cut the carryout by the same amount to 1.35 million.

The report almost made minor adjustments to barley exports and feeding, resulting in the carry out number dipping to 1.6 million tonnes from 1.675 million last month.

Light crude oil nearby futures in New York were down 41 cents to US$41.76 per barrel.

The Canadian dollar at noon was US78.17 cents, up from 78.13 cents the previous trading day. The U.S. dollar at noon was C$1.2792.

Winnipeg ICE Futures Canada dollars per tonne

Canola May 2016 479.70 +5.80 +1.22%

Canola Jul 2016 484.90 +5.40 +1.13%

Canola Nov 2016 483.00 +4.60 +0.96%

Canola Jan 2017 487.50 +4.30 +0.89%

Canola Mar 2017 489.00 +4.00 +0.82%

Milling Wheat May 2016 234.00 -1.00 -0.43%

Milling Wheat Jul 2016 233.00 -1.00 -0.43%

Milling Wheat Oct 2016 230.00 -1.00 -0.43%

Durum Wheat May 2016 297.00 -1.00 -0.34%

Durum Wheat Jul 2016 292.00 -1.00 -0.34%

Durum Wheat Oct 2016 281.00 -1.00 -0.35%

Barley May 2016 172.00 unch 0.00%

Barley Jul 2016 174.00 unch 0.00%

Barley Oct 2016 174.00 unch 0.00%

American crop prices in cents US/bushel, soybean meal in $US/short ton, soy oil in cents US/pound

Chicago

Soybeans May 2016 955.75 +19.5 +2.08%

Soybeans Jul 2016 964.5 +19.75 +2.09%

Soybeans Aug 2016 966.25 +19.5 +2.06%

Soybeans Sep 2016 964.75 +19 +2.01%

Soybeans Nov 2016 966 +18.25 +1.93%

Soybeans Jan 2017 970 +18.25 +1.92%

Soybean Meal May 2016 292.7 +7.6 +2.67%

Soybean Meal Jul 2016 295.2 +7.6 +2.64%

Soybean Meal Aug 2016 296.1 +7.3 +2.53%

Soybean Oil May 2016 33.96 +0.27 +0.80%

Soybean Oil Jul 2016 34.24 +0.28 +0.82%

Soybean Oil Aug 2016 34.33 +0.27 +0.79%

Corn May 2016 373.5 +10.75 +2.96%

Corn Jul 2016 377 +11.5 +3.15%

Corn Sep 2016 379 +11 +2.99%

Corn Dec 2016 384 +9.75 +2.61%

Corn Mar 2017 393.25 +9.25 +2.41%

Oats May 2016 192 +4.5 +2.40%

Oats Jul 2016 200 +4.25 +2.17%

Oats Sep 2016 208 +4 +1.96%

Oats Dec 2016 216.5 +3.75 +1.76%

Oats Mar 2017 225.25 +3.75 +1.69%

Wheat May 2016 461.5 +9 +1.99%

Wheat Jul 2016 467.5 +8.75 +1.91%

Wheat Sep 2016 477 +8.75 +1.87%

Wheat Dec 2016 491.75 +8.5 +1.76%

Wheat Mar 2017 507.5 +8.75 +1.75%

Minneapolis

Spring Wheat May 2016 520 +3.5 +0.68%

Spring Wheat Jul 2016 526.75 +3.25 +0.62%

Spring Wheat Sep 2016 535.25 +3 +0.56%

Spring Wheat Dec 2016 547.25 +1.25 +0.23%

Spring Wheat Mar 2017 559.5 +0.5 +0.09%

Kansas City

Hard Red Wheat May 2016 454.5 +7.25 +1.62%

Hard Red Wheat Jul 2016 465 +7.5 +1.64%

Hard Red Wheat Sep 2016 479 +7.25 +1.54%

Hard Red Wheat Dec 2016 499 +6.75 +1.37%

Hard Red Wheat Mar 2017 512.5 +6.5 +1.28%

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