Crop markets enjoyed strong gains for most of the morning, led higher by the oilseed complex but American crop futures gave back the territory by the close.
However, canola held on and closed with a solid gain, particularly for November, which will soon be in its delivery period and which will expire Nov. 14. January has become the most actively traded contract.
November is now at an inverse to the January contract.
November closed at $433.70, up $11 and January was $425 per tonne, up $4.50. January was at a slight inverse to March, which closed at $424.70, up $1.90.
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U.S. grains: Corn futures edge up, soybeans sag on improving US crop ratings
Chicago Board of Trade corn futures extended slight gains on Tuesday as short covering and bargain buying continued to support a rebound from contract lows reached during the previous session.
It seems that the farmer, by showing control over deliveries, is driving much of this current rally.
Soy meal was again the key driver.
American farmers are not rushing to deliver and that is keeping crushing plants desperate for soybeans, lifting the cash price.
This fundamental strength attracts fund buying in the futures, pushing the rally higher and allowing it to spill over into corn, canola, and wheat.
However, the strong price also attracts some soybean deliveries and by late morning the price was retreating quickly.
Also, the futures rally in soy meal could not break through the $400 per short ton level, a level that has been a point of technical resistance in the past.
December soy meal peaked at $399.80 and closed at $375.10.
These rallies are welcome, but the bigger supply and demand picture remains bearish.
Yes, corn almost touched 100-day moving average today. Darin Newsom of DTN noted a key reversal in corn in the long-term decline that has been dominant since the summer of 2012.
But the big U.S. harvest continues to roll on and eventually that will have to start to fill up storage and plug the handling system.
Rains are expected in central Brazil this week where a record soybean crop is expected.
So there isn’t a real, continuing shortage.
And Arlan Suderman of Water Street Solutions noted today that the open interest in the market is declining. Open interest is a sign of whether new money is entering the market or whether it’s just a case of liquidating short positions. Reduced open interest is a bearish signal, he notes.
On the other hand, the funds remain heavily short in the soybean market so they are vulnerable to a short squeeze if domestic and export demand proves stronger than expected or the crop is not as large as thought.
Which line of thinking is correct? Is there a reversal or is the market bearish?
I’m not qualified to say. Likely, all these observations are correct and it will take some time to see which one has momentum.
Canola might have been able to keep its gains better because vegetable oils had their own positive news today.
Reuters reported that Malaysia, the world’s second-largest palm producer, today said it would increase the amount of palm oil in biodiesel to seven percent from November onwards, up from five percent now.
The move lifted palm oil futures on the expectation that it will create new demand for the oil, but some traders wondered if it would make a significant dent in growing stockpiles of the oil.
Also,a nalyst Oil World updated its forecast of global palm production, trimming its outlook because of dry weather in Indonesia and Malaysia earlier this year. It takes a while for dry weather to affect palm production.
Oil World also forecast that consumption of the eight major vegetable oils would total 169.3 million tonnes, topping the forecasted production of 168.7 million tonnes.
It sees rapeseed oil production at about same as last year and sunflower oil slipping five percent.
Louis Dreyfus today said it did not know when it would reopen its canola crushing plant at Yorkton, Sask. It was damaged in an explosion Friday in a canola meal packaging area. See that story here: Louis Dreyfus Canadian canola plant offline indefinitely after fire.
Corn closed slightly higher. Aside from the spill over support from the soy complex, corn is supported by the slow pace of the American harvest.
In the heart of the Midwest, Iowa is only 36 percent done its corn harvest, compared to the five-year average of 65 percent.
At the close, wheat wound up performing better than corn or soybeans.
Minneapolis hard red spring December closed at $5.76 ¾, up five cents of 0.87 percent. It did a little better than Kansas hard red winter wheat and Chicago soft wheat.
Wheat futures continue to struggle under the weight of ample world supply, but there are supportive factors.
The U.S. Department of Agriculture crop condition rating for winter wheat on Monday was 59 percent good-to-excellent, well below analysts’ expectations of 68 percent.
Although seeding in hard red winter wheat areas — Kansas, Oklahoma, Nebraska and Texas — is at the normal pace, seeding in soft red winter areas, such as Illinois and Indiana is behind the normal pace.
The market is also concerned about dry and cold weather in a large part of Russia’s winter wheat region. You can read more about the Russian situation in my column in Thursday’s newspaper.
Light crude oil nearby futures in New York rose 42 cents at US$81.42 per barrel.
The Canadian dollar at noon was US89.46 cents, up from 88.91 cents the previous trading day. The U.S. dollar at noon was C$1.1178.
Strong corporate quarterly profit reports continued to support stock markets.
Toronto Stock Exchange’s S&P/TSX composite index was up 47.11 points, or 0.33 percent, at 14,516.11.
The Dow Jones industrial average rose 187.81 points, or 1.12 percent, to 17,005.75, the S&P 500 gained 23.42 points, or 1.19 percent, to 1,985.05 and the Nasdaq Composite added 78.36 points, or 1.75 percent, to 4,564.29.
Winnipeg ICE Futures Canada dollars per tonne
Canola Nov 2014 433.70 +11.00 +2.60%
Canola Jan 2015 425.00 +4.50 +1.07%
Canola Mar 2015 424.70 +1.90 +0.45%
Canola May 2015 426.70 +0.50 +0.12%
Canola Jul 2015 427.20 -0.40 -0.09%
Milling Wheat Dec 2014 225.00 +2.00 +0.90%
Milling Wheat Mar 2015 231.00 +2.00 +0.87%
Milling Wheat May 2015 234.00 +2.00 +0.86%
Durum Wheat Dec 2014 356.50 unch 0.00%
Durum Wheat Mar 2015 357.50 unch 0.00%
Durum Wheat May 2015 357.50 unch 0.00%
Barley Dec 2014 140.00 +3.00 +2.19%
Barley Mar 2015 143.00 +3.00 +2.14%
Barley May 2015 143.00 +3.00 +2.14%
American crop prices in cents US/bushel, soybean meal in $US/short ton, soy oil in cents US/pound
Chicago
Soybeans Nov 2014 1008 +2 +0.20%
Soybeans Jan 2015 1015 +2.25 +0.22%
Soybeans Mar 2015 1021 +1.5 +0.15%
Soybeans May 2015 1027.75 +2 +0.19%
Soybeans Jul 2015 1033.25 +2.75 +0.27%
Soybeans Aug 2015 1031.5 +1.5 +0.15%
Soybean Meal Dec 2014 375.1 -1.7 -0.45%
Soybean Meal Jan 2015 357.7 -3.2 -0.89%
Soybean Meal Mar 2015 342 -3.4 -0.98%
Soybean Oil Dec 2014 32.79 +0.56 +1.74%
Soybean Oil Jan 2015 33.02 +0.55 +1.69%
Soybean Oil Mar 2015 33.29 +0.55 +1.68%
Corn Dec 2014 364.5 +1.5 +0.41%
Corn Mar 2015 378 +1.25 +0.33%
Corn May 2015 386.75 +1.25 +0.32%
Corn Jul 2015 393.75 +1 +0.25%
Corn Sep 2015 400.5 +0.75 +0.19%
Oats Dec 2014 356 -4.5 -1.25%
Oats Mar 2015 343 -2.75 -0.80%
Oats May 2015 336.5 -1.5 -0.44%
Oats Jul 2015 328 -2 -0.61%
Oats Sep 2015 330.75 -1.75 -0.53%
Wheat Dec 2014 530.75 +8 +1.53%
Wheat Mar 2015 544.5 +8 +1.49%
Wheat May 2015 552.5 +8.5 +1.56%
Wheat Jul 2015 560.5 +8.75 +1.59%
Wheat Sep 2015 570.75 +9 +1.60%
Minneapolis
Spring Wheat Dec 2014 576.75 +5 +0.87%
Spring Wheat Mar 2015 586.5 +4.25 +0.73%
Spring Wheat May 2015 594.25 +3.75 +0.64%
Spring Wheat Jul 2015 603 +4.5 +0.75%
Spring Wheat Sep 2015 610.75 +4.5 +0.74%
Kansas City
Hard Red Wheat Dec 2014 602 +7.25 +1.22%
Hard Red Wheat Mar 2015 606 +7.5 +1.25%
Hard Red Wheat May 2015 605.75 +7.25 +1.21%
Hard Red Wheat Jul 2015 599.75 +6.75 +1.14%
Hard Red Wheat Sep 2015 609.5 +5.75 +0.95%
