Small canola crop, deteriorating soybeans push canola higher

A reduction in the condition rating of U.S. soybean and corn crops caused crop futures to jump higher Wednesday, including Winnipeg canola.Also contributing to the gains were continuing worries about the size of the Canadian canola crop with excess rain problems in large areas and drought in the Peace River region.Canola futures rose above key technical resistance points, which attracted fund buying that added to the momentum.Farmers are reluctant sellers, given the rising market, and basis levels are tightening to attract deliveries.Crop condition ratings in the United States, released Tuesday because of the Monday holiday, showed that corn and soybeans deteriorated because of overly wet conditions. However, the rates are still about equal to where they were last year at this time.Crop markets were also supported by rising wheat prices, buoyed by a heat wave in Western Europe that threatens to shave yield and drought in parts of Russia.Also supportive was crude oil, which rose on a rally in the stock market. Summer travel usually lifts gasoline and crude prices, but demand in the U.S. on the July 4 weekend was down from the Memorial Day weekend and overall demand is little changed from last year’s sluggish pace.The U.S. Department of Agriculture releases its production outlook Friday morning, which could push markets up or down depending on its yield estimates.July canola rose $11.30 per tonne to $436.50 on six trades. The July contract has moved into delivery mode and expires July 14.New crop November canola, the most traded contract, rose $10.20 per tonne to $434.40 on 7,417 trades. The previous day’s best basis was $2 per tonne off the November contract in the par region, according to the Winnipeg ICE Futures daily report.The 14-day Relative Strength Index for July canola was 54, according to BarChart.com. November’s RSI was 57. The rule of thumb is an RSI of 30 indicates an over sold market and 70 indicates an over bought market.The Canadian dollar at noon was 94.99 cents US, down from 95.26 cents at noon the previous trading day. The U.S. dollar at noon was $1.0527 Cdn.Winnipeg July barley was steady and untraded at $172. October was $156 and December $156 with no trades.Chicago July soybeans rose 28.75 cents to $9.93 US per bushel; new-crop November rose 32.5 cents to $9.325.July oats rose 5.75 cents to $2.5375 per bu. December oats rose 6.75 cents to $2.6275 per bu. In New York, crude oil for August delivery rose $2.09 to $74.07 per barrel.

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