Midwest heat returns to lift crop futures despite falling stock market

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Published: August 2, 2011

Another weekend of intense heat in the Midwest and southern and northern plains lent strength on Tuesday to crop futures, including canola.

November canola closed at $566.70, up $9.50 per tonne on the first trading day in Canada after the long weekend.

Corn rose the limit and other grains and oilseed rode its coat tails. It was the second day of strong gains for corn while the stock market fell again on weak U.S. economic data.

The heat in the Midwest is expected to continue until the weekend when showers are expected.

Commodity Weather Group on Tuesday forecast U.S. 2011 corn production at 12.621 billion bushels, with an average of 150 bushels per acre, well below the USDA’s estimate of 13.470 billion bu., with a yield of 158.7 bu. per acre.

The USDA on Monday said the U.S. corn crop condition was unchanged from the prior week with 62 percent rated to be in good to excellent condition.

U.S. soybean good-to-excellent rating declined two percentage points to 60 percent.

Spring wheat declined by four points to 70 percent good-to-excellent last week.

Temperatures in the mid 20s with highs some days near 30 C in Saskatchewan this week should drive crop maturation and might shave canola yield potential.

Hog futures continued their soaring rise hitting a record high for a lead month of 104.025 cents per pound on tight supply because of slowed weight gain during the heat wave and because of strong export demand for pork.

Overnight, South Korea announced its had waved tariffs on imported chilled pork.

U.S. president Barack Obama signed the budget reduction law averting an unprecedented default on U.S. debt. This brought some relief to financial markets, but some investors worried that the country could still lose its prized AAA-credit rating. Investors also remained worried about the weak U.S. economy.

Winnipeg (per tonne)

Canola Nov 11        $566.70, up $9.50

Canola Jan 12        $575.20, up $9.40

Canola Mar 12        $580.70, up $8.90

Canola May 12        $585.60, up $8.50

The previous day’s best basis was one cent under the November contract according to ICE Futures Canada in Winnipeg.

The July contract’s 14-day Relative Strength Index was 51. The rule of thumb is an RSI of 30 indicates an over sold market and 70 indicates an over bought market.

Western Barley Oct 11        $205 unchanged

Chicago (per bushel)

Soybeans Aug 11        $13.73, up 14.25 cents

Soybeans Sep 11        $13.70, up 16.75

Soybeans Nov 11        $13.7975, up 17.75

Corn Sep 11        $7.1125, up 30.0

Corn Dec 11        $7.1575, up 30.0

Oats Sep 11        $3.54, up 8.5

Oats Dec 11        $3.65, up 7.0

Minneapolis (per bushel)

Spring Wheat Sep 11        $8.495, up 15.25 cents

Spring Wheat Dec 11        $8.5525, up 19.5

Spring Wheat Mar 12        $8.695, up 24.0

Light crude oil nearby futures in New York fell $1.10 to $93.79 US per barrel.

The Canadian dollar at noon was $1.0438 US, down from $1.0484 the previous trading day. The U.S. dollar at noon was 95.80 cents Can.

Equity markets plunged on monthly reports that showed weak consumer confidence in the U.S. and slow economic activity.

The Toronto Stock Exchange composite index closed down 193.31 points, or 1.5 percent, at 12,752.32.

The Standard & Poor’s 500 Index fell 32.89 points, or 2.56 percent, to 1,254.05. The index has fallen seven straight sessions and has now turned negative on the year.

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