Canola closed higher Tuesday, driven up by growing strength in soybeans and soyoil as the day progressed.
November Winnipeg canola futures closed up $7 per tonne at $568 and up $6.80 for January at $575.90, with much of the gain coming late in the day.
Traders began the session worried about signs of weakness, but as the Chicago rally took hold traders reversed short positions and added to the bullish pressure.
Generally good weather across Western Canada added a bearish element, but not enough to counteract the influence of Chicago.
The big story of the day was the U.S. Department of Agriculture’s World Agricultural Supply and Demand reports, which sparked a corn rally.
The USDA pushed up corn ending stocks, but since traders had expected a bigger boost, the USDA number was seen as bullish. Traders had expected a 2010-11 corn carryout of 905 million bushels, but instead saw an 880 million bu. official estimate. That leaves corn stocks extremely tight.
Soybean stocks numbers fell almost exactly within trader expectations, so the vegoil markets were quieter than the grains.
Wheat was also close to expectations.
Outside markets were dreary as November rain as sour moods spread after Moody’s downgraded Ireland’s government debt to junk status, something some benighted investor somewhere had not realized was inevitable.
European Union financial officials also for the first time admitted that virtually bankrupt Greece might have to default or restructure its expiring debt issues, something politicians had fought doing for more than a year.
U.S. stock markets were briefly buoyed by the release of comments from the recent Federal Reserve meeting in which officials were seen to be willing to consider another round of quantitative easing. The end of QE2 has spooked many and given commodity market bears a reason to growl.
Without QE to force return-seeking money into non-traditional assets, a crucial underpinning of the long commodity bull market is now missing, bears think.
Winnipeg (per tonne)
Canola Jul 11 $583.00, up $7.00
Canola Nov 11 $568.00, up $7.00
Canola Jan 12 $575.90, up $6.80
Canola Mar 12 $581.50, up $5.40
Western Barley Jul 11 $207.00, unchanged
Chicago (per bushel)
Soybeans Jul 11 $13.6650, up 14.00 cents
Soybeans Aug 11 $13.5550, up 9.00
Soybeans Nov 11 $13.5825, up 11.25
Corn Jul 11 $6.9700, up 15.50
Corn Dec 11 $6.5800, up 25.25
Oats Jul 11 $3.5575, up 9.75
Oats Dec 11 $3.6300, up 8.25
Minneapolis (per bushel)
Spring Wheat Jul 11 $8.1150, down 3.00 cents
Spring Wheat Sep 11 $7.9300, down 1.25
Spring Wheat Dec 11 $7.9925, up 1.00
