Surprisingly large cuts to U.S. corn yield and tighter stocks revealed in today’s U.S. Department of Agriculture report sent grain and oilseed futures soaring.
Canola went along for the ride.
U.S. yields were hurt by hot weather in August and heavy rain in the northern corn belt in September. Details about the report are at the bottom of this report.
With the forecast for tightening year end stocks, the stage is set for an acreage bidding battle.
Much will depend on South American crops, where the worry is that a strengthening La Nina will bring a dry trend during the growing season.
Weekly canola crush jumped 18 percent to 113,890 tonnes.
In Winnipeg, November canola rose $15 per tonne to $488.30 on 14.665 trades. On the week, the contract rose $12.60.
The January contract rose $14.90 on Friday to $497.50 on 11,549 trades.
The previous day’s best basis was $19.13 per tonne under the November contract in the par region, according to the Winnipeg ICE Futures daily report.
The 14-day Relative Strength Index for November was 58 according to BarChart.com. The rule of thumb is an RSI of 30 indicates an over sold market and 70 indicates an over bought market.
October barley futures were unchanged, but December rose $4.50 to $180 per tonne and the rest of the deferred contracts rose $4.60 per tonne.
Chicago new crop November soybeans locked up the 70 cent limit to $11.35 US per bushel. January was also up 70 cents at $11.45.
December oats locked up 20 cents to $3.695 per bu. March oats locked up 20 cents to $3.79.
In New York, crude oil for November delivery rose 99 cents to $82.66 US per barrel.
The Canadian dollar at noon was 98.66 cents US, up from 98.37 cents the previous trading day. The U.S. dollar at noon was $1.0136.
The TSX composite index closed at 12,535.59, up 89.66 points.
The S&P 500 rose 7.09 points to close at 1,165.15. On the week, the TSX climbed 1.7 percent and the S&P 500 rose 1.6 percent.
There were weak September jobs reports in both countries. In the U.S. there is a strong expectation that the Federal Reserve will inject cheap money into the economy as a stimulous measure.
USDA put the corn crop at 12.664 billion bushels based on average yield of 155.8 bu. per acre.
The average of analysts’ estimates was a 12.96 billion bu. crop on the basis of a 160 bu. yield.
The USDA put the soybean crop at 3.408 billion bu. based on yield of 44.4 bu. an acre.
The average of analysts’ estimates was 3.475 billion bu. on a yield of 44.895 bu.
With the smaller crop and expectations of strong demand, the USDA now forecasts that stocks by the end of the crop year will fall to 902 million bu., 270 million below trade expectations and below the psychologically important one billion mark.
USDA also tightened its forecast for year end soybean stocks to 265 million bu. and wheat to 853 million, both below the average of traders’ expectations.
