Canola edged lower, soybeans were little changed but corn and wheat rose again Thursday, supported by lingering bullish sentiment from the previous day’s U.S. Department of Agriculture report.
Canola was pressured by an uptick in farmer selling.
It was also pressured by lower soy oil futures, which were influenced by falling crude oil.
Traders were disappointed by a weak weekly U.S. job report and tempered their optimism for rising oil demand. There was also speculation that OPEC could increase production if crude oil climbs beyond $90 per barrel in New York.
The oilseed market has priced in a reduced Argentine soybean crop because of La Nina dryness. On Thursday, the Buenos Aires Grain Exchange forecast a 47 million tonne crop. USDA on Wednesday had forecast 50.5 million tonnes.
Rain is forecast for the coming week in Argentina.
Reuters News Service reported that the U.S. Food and Drug Administration has posted a draft policy that would limit its enforcement actions against animal feed shipments with salmonella to just a few types of the bacteria known to cause disease in animals and poultry, instead of flagging all shipments with salmonella.
Last year the salmonella issue restricted Canadian canola meal exports to the U.S. from several crushing plants. The meal was shipped instead to Asia. But slowly plant restrictions have been lifted and meal exports to the U.S. are up this crop year.
Saskatchewan canola farmers on Thursday heard an upbeat assessment about the canola market from analyst Larry Weber.
He told a session during Crop Production Week that he thinks a seeded acreage battle later this winter will drive crop prices higher, including canola.
The U.S. will be hard pressed to grow enough corn and soybeans to meet demand for the next several years and that will keep oilseed prices high. Weber believes canola will stay above $10 per bushel for at least the next three years.
But while there is strong support for crop prices from fundamental supply and demand forces, there will be large price volatility, often caused by government policies.
Governments are worried about rising food inflation, particularly in poor countries, and the measures they take to control food prices have the potential disrupt an otherwise positive outlook for the prices farmers see, Weber said.
But Stan Jeeves, outgoing president of the Saskatchewan Canola Growers, added a note of caution. There is demand for more corn and soybeans acres in the U.S. and it is difficult to see where they will come from if you limit the search to traditional cropping acres. But there are million of acres in hay in the U.S. and its cattle herd is contracting, so there is potential for hay land to go into crops, Jeeves noted.
In Winnipeg on Thursday, most traded March canola fell $3.80 to $595.80 on 10,856 trades.
The January canola contract fell $3.80 to $589.30 per tonne on eight trades. The contract expires Jan. 14.
The November 2011 contract fell $1.90 to $552.
The previous day’s best basis was $23 under the March contract according to ICE Futures Canada in Winnipeg.
The March contract 14-day Relative Strength Index was 64. The rule of thumb is an RSI of 30 indicates an over sold market and 70 indicates an over bought market.
March barley futures were steady at $194. There are only two contracts in open interest.
Chicago January soybeans rose one cent to $14.10 US per bushel. Most traded March rose one cent to $14.16.
March corn rose 11.5 cents to $6.425 per bu.
March oats rose two cents to $3.965 per bu.
March Minneapolis hard spring wheat rose 16.25 cents to $8.9375 per bu.
In New York, crude oil for February delivery fell 46 cents to $91.40 US per barrel.
The Canadian dollar at noon was $1.0134 US, little changed from $1.0138 the previous trading day. The U.S. dollar at noon was 98.68 cents Cdn.
The Toronto Stock Exchange composite index fell 58.73 points to 13,401.48.
Standard & Poor’s 500 Index fell 2.20 points to 1,283.76.
