Funds continued to pull back from crop markets Tuesday, selling as prices fell below technical support levels.
Increased farmer selling pressured canola, as did news yesterday that Australia’s canola crop would be larger than forecast, despite the flooding in December.
Australia said it would produce 2.1 million tonnes, up 11 percent from last year. It forecast it would export 1.676 tonnes, up from 1.548 million last year.
The main fundamental impedus for the general crop price downturn is a seasonal shift of soybean buying from the U.S. to South American producers who have begun harvest.
Indeed, the U.S. Department of Agriculture in the morning reported cancellation of a sale of 110,000 tonnes of soybeans for 2010-11 delivery to an unknown destination.
Also, South American crop forecasts are growing. Oilseed analysts Oil World today forecast Brazil’s soybean crop would be a record 71 million tonnes, up one million from a Feb. 8 forecast and up from last year’s 68.6 million.
Argentina is getting more rain, supporting its production prospects after the damage caused by drought earlier in the year.
Corn prices fell the least today. The USDA said that frost in north Mexico earlier this month, the coldest weather in 20 years, had damaged one to three million tonnes of corn. The country had expected to produce about 25 million tonnes of corn.
Wheat also fell sharply despite worries about the health of winter wheat crops in China and the United States.
In Winnipeg, March canola fell $13.40 to $573.40 per tonne on 18,706 trades.
May fell $13.60 to $581.70 on 12,120 trades.
The new crop November 2011 contract fell $13.20 to $564.40.
The previous day’s best basis was $16 under the March contract according to ICE Futures Canada in Winnipeg.
The March contract 14-day Relative Strength Index was 34. 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 and untraded at $194. May and July were $205.
Chicago March soybeans fell 34.75 cents to $13.68 per bushel.
March corn fell 5.25 cents to $6.905 per bu.
March oats fell 6.5 cents to $4.055 per bu.
March Minneapolis hard spring wheat fell 37.5 cents to $9.755 per bu. New crop December fell 32.25 cents to $9.98.
In New York, crude oil for March delivery fell 49 cents to $84.32 US per barrel.
The Canadian dollar at noon was $1.0114 US, down slightly from $1.0116 the previous trading day. The U.S. dollar at noon was 98.87 cents Cdn.
The Toronto Stock Exchange composite index rose 18.58 points to 13,929.35, supported by stronger gold prices.
U.S. retail sales rose less than forecast in January. The Standard & Poor’s 500 index fell 4.3 points to 1,328.02.
