Canola follows seven percent jump in wheat price

Wheat again drove the grains complex higher Wednesday with Chicago wheat futures jumping almost seven percent higher.Winnipeg canola went along for the rise, posting gains for the fifth consecutive day.The United Nations’ Food and Agriculture Organization was the latest to lower its world wheat production forecast due to crop problems in the former Soviet Union, Europe and Canada.It lowered its forecast to 651 million tonnes, down four percent from its previous outlook.Market watchers believe that exports out of the Black Sea will be severely curtailed, even if the governments of Russia, Ukraine and Kazakhstan do not officially restrict exports to prevent food price inflation.The FAO said that despite the smaller crop, the world will have enough wheat thanks to supplies carried over from 2009-10 and a big crop in the United States.The strength of the wheat price rally caused corn and soybeans to rise, which helped push up canola.The wheat rally is attracting investment fund money into crop futures, adding to the upward pressure.Crop weather in Western Canada is mostly favourable to the developing canola crop, but the uncertainty about frost and the ultimate size of the crop justifies the weather premium in the market.Also supportive to canola was a report from grain trader Toepfer that estimated Germany’s rapeseed crop at 5.5 million tonnes, down 13 percent from last year’s 6.3 million. Germany is Europe’s largest rapeseed producer.In Winnipeg, November canola rose $2.80 per tonne to $468.100 on 6,244 trades.The January contract rose $3.10 to $470.60 on 380 trades.The previous day’s best basis was steady at $13.90 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 73 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.The Canadian dollar at noon was 98.18 cents US, up from 97.8 the previous trading day. The U.S. dollar at noon was $1.0185.Winnipeg October barley was steady and untraded at $159.10 and December also steady at $159.10.Chicago August soybeans fell 0.5 cent to $10.53 US per bushel. September rose 6.5 cents to $10.2925. New-crop November rose 6.25 cents to $10.2425.September oats rose 5.25 cents to $2.8025 per bu. December oats rose 5.25 cents to $2.9325 per bu. In New York, crude oil for September delivery fell eight cents to $82.47 US per barrel.

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