Canola futures on Wednesday bucked an otherwise neutral-to-down day in crop markets, closing higher and breaking what had been a multi-day price retreat.
The nearby contract gained $1.60 per tonne to close at $575. The recent high was posted Feb. 9 when the March contract touched $619.50 at one point.
Canola rose despite headwinds from lower soybean futures and a stronger Canadian dollar. Domestic crushers stepped up buying on the lower price.
Soybeans closed slightly lower, but losses were limited by stronger crude oil prices and by concerns that the port strike in Argentina might be revived, limiting that country’s ability to export.
Corn was mostly flat.
There was little new news to trade in the wheat pits. Chicago wheat edged slightly lower while Minneapolis posted larger declines. With markets down this week, traders were less concerned that spring wheat would lose acres to other crops.
Reuters reported that veteran grain traders are still scratching their heads over the reaction to a preliminary forecast released Monday by the U.S. Department of Agriculture, showing U.S. crop acreage would increase by 10 million acres.
The forecast was generated by a model using prices from late 2010 and as such is normally not considered a market mover.
Acreage projections from USDA’s annual outlook conference next week will have greater importance and the first projection based on a survey of farmers does not come out until March 31.
Veteran traders said the reaction, which contributed to the sharp sell off in recent days, indicates the new power carried by non-agriculture investors and investment funds, which do not have long experience in crop commodity trade.
Winnipeg
Canola Mar 11 $575 per tonne, up $1.60
Canola May 11 $582.90 up $1.20
Canola Jul 11 $590.20 up 90 cents
Canola Nov 11 $563.10 down $1.30
The previous day’s best basis was $16.20 under the March contract according to ICE Futures Canada in Winnipeg.
The March contract 14-day Relative Strength Index was 35. The rule of thumb is an RSI of 30 indicates an over sold market and 70 indicates an over bought market.
Western Barley Mar 11 $194 per tonne unchanged
Western Barley May 11 $205 unchanged
Chicago
Soybeans Mar 11 $13.66 US per bushel down 2 cents
Soybeans May 11 $13.78½, down 2¾ cents
Corn Mar 11 $6.90½ per bu., unchanged
Corn May 11 $7.01 unchanged
Oats Mar 11 4.04½ per bu., down 1 cent
Oats May 11 4.12 down 1 cent
Minneapolis
Spring Wheat Mar 11 $9.57½ per bu., down 18 cents
Spring Wheat May 11 $9.67, down 19½ cents
Spring Wheat Dec 11 $9.86¼, down 11¾ cents
In New York, crude oil for March delivery rose 67 cents to $84.99 US per barrel. Oil was supported by increased tension between Israel and Iran. Two warships from Iran are set to travel through the Suez Canal enroute to Syria.
The Canadian dollar at noon was $1.0147 US, up from $1.0114 the previous trading day. The U.S. dollar at noon was 98.55 cents Cdn.
The Toronto Stock Exchange composite index topped 14,000, climbing 129.83 points to 14,059.18.
Excellent quarterly profits at Dell, the world’s No. 2 computer maker, helped the Standard & Poor’s 500 index rise 8.31 points to 1,336.32. The index has about doubled since March 9, 2009.
