Resource News International
Oilseed futures, including canola and soybeans, will likely see short-term weakness, but will be stronger in the longer term, said technical analyst David Drozd of Ag-Chieve Corporation in a presentation at Canadian Wheat Board’s annual Grain World conference in Winnipeg, February 22.
Drozd said his analysis was indicating a nearby test of support in soybeans and canola with prices possibly moving to their lowest levels in over a year. In addition to the technicals, he said oilseed futures should also be pressured in the near term by the large global supplies, the strengthening U. S. dollar, and a softer tone in crude oil.
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For soybeans, Drozd said nearby futures could decline to $7.77 per bushel, a price not seen since December 2008. The May CBOT soybean contract is currently trading at around $9.69.
In canola, Drozd had a downside target of $353.10 per tonne for the nearby futures if values move below support at $370, a price also not seen since late 2008. The May contract is currently trading at roughly $392 per tonne.
Drozd said the lower prices go now, the tougher it will be to rally the markets back higher in the spring. However, he said the longer-term outlook for oilseeds was relatively stronger from a historical perspective, with values entering a new trading range. Drozd said it still remains to be seen what the lows of the new range will be, but he said the new market conditions would keep prices from returning to the levels of four or five years ago.
