Canola futures followed soybeans higher in heavy trade on Tuesday after the USDA, in a surprise move, cut its estimate of the U.S. soybean crop.
The January canola contract jumped 3.3 percent.
Gains were limited by increased elevator hedge pressure as farmers increased cash selling.
Corn and wheat also rose strongly, at first propelled by soybean’s momentum and the USDA’s cuts to corn and wheat ending stocks, but by the end of the day they closed down because of a stronger U.S. dollar.
USDA lowered its estimate of 2010 U.S. soy production to 3.375 billion bushels from 3.408 billion in October. That was less than the average of analysts’ estimates for 3.433 billion.
Year-end soy stocks were pegged at 185 million bu., below an average of analysts’ estimates for 243 million.
U.S. corn production was put at 12.54 billion bu., below an average of analysts’ estimates for 12.556 billion. Corn ending stocks were pegged at 827 million bu., below the average estimate for 845 million.
U.S. wheat ending stocks were 848 million bu., short of the 855 million bu. estimate. World wheat ending stocks were 172.51 million tonnes, down from 174.66 million in October.
In Winnipeg, November canola rose $18.20 per tonne to $563.80 on no trades. The contract is in delivery mode.
The January contract rose $18.20 to $568.40 on 15,151 trades.
The November 2011 contract was up $7.20 to $520.90.
The previous day’s best basis was $28 per tonne under the November contract in the par region, according to the Winnipeg ICE Futures daily report.
The November contract RSI was 87. The rule of thumb is an RSI of 30 indicates an over sold market and 70 indicates an over bought market.
December barley futures were unchanged at $180.10 per tonne. March was unchanged at $185.
Chicago new crop November soybeans jumped 54.75 cents to $13.1925 US per bushel. January rose 54.25 cents to $13.29.
December corn fell nine cents to $5.7625 per bu.
December oats fell 3.5 cents to $3.73 per bu. March oats also fell 3.5 cents to $3.855.
In New York, crude oil for December delivery fell 34 cents to $86.72 US per barrel.
The Canadian dollar at noon was 99.87 cents US, up from 99.78 cents the previous trading day. The U.S. dollar at noon was $1.0013.
The loonie reached par early in the day, but retreated as the U.S. dollar gained in the afternoon on a pull back from riskier investments and worries about European debt.
After big gains on strong gold shares on Monday, the TSX composite index pulled back on Tuesday, dropping 135.85 points to close at 12,916.63. The S&P 500 fell 9.85 points to close at 1,213.40.
