Canola futures surged the most in 29 months on signs that U.S. oilseed production will be smaller than the government predicted and as hot, dry weather threatens crops.
Soybean output will probably be 3 percent below the U.S. Department of Agriculture forecast of 3.255 billion bushels after planting delays and cool weather hampered growth, Professional Farmers of America said Aug. 23, after a tour of 2,600 fields in seven states last week. Heat advisories are in effect for parts of South Dakota, Nebraska, Iowa, and Minnesota and temperatures are expected to range between 95 degrees Fahrenheit (35 Celsius) to 110 degrees, according to the National Weather Service.
“It’s all based on U.S. weather right now and the soybeans,” Lorne Boundy, a trader with Paterson Grain, said in a telephone interview from Winnipeg. “Canola has to follow.”
Canola futures for November settlement jumped 4.3 percent to close at C$538.00 ($512.23) a metric ton at 1:45 p.m. on ICE Futures Exchange in Winnipeg, the biggest gain for a most-active contract since March 17, 2011. Earlier, prices touched $544.90, the highest since July 11.
Soybeans, which compete with canola among buyers of vegetable oils and animal feed, have risen 15 percent this month in Chicago trading.