Canola futures prices didn’t do much Monday, other than weakening by a few cents.
That’s not a big surprise, given the closure of U.S. crop futures markets for Martin Luther King, Jr. Day, and the meager action hasn’t provided much for traders to chew on.
March canola fell 90 cents per tonne to $449.70 and May fell $2.50 to $443.90. The inversion represents to most observers the expectation of a big South American crop coming, and therefore weaker prices from spring onward.
Palm oil prices are near six-year lows, and the world vegetable oil crop supply is heavy, with South American crops looking safer and safer as they grow their way toward harvest.
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Crude oil prices also aren’t helping, with nearby Brent futures falling yet again Monday.
And China’s move to restrain margin-based stock market trading sent jitters through markets, as the Shanghai index fell 7.7 percent.
But European stock markets were mostly unaffected by the Shanghai shivers, with many seeing it as a local phenomenon.
Still, growing anxieties about declining growth in China, weakening in the formerly strong U.S., and deflation fears about Europe have cast a pall over all markets.
The World Economic Forum in Davos, often a gathering of holders of grim outlooks, is expected to discuss the threats to world economic progress by Islamist extremism and violence, North Korean instability, Russian belligerence and general world economic weakness.
Perhaps of most anxiety-inducing concern is the slump in oil prices, which undermines many economies around the world, from the Middle East to Venezuela to Russia. While a boost to consumers around the globe, for oil producers today’s prices could cause multiple negative impacts.
And they resurrect the fears of deflation that massive commodity weakness engenders. Will benefit for consumers allow the damage to commodity producers to be taken in stride, or will the world’s economy slip into deflation.
Commodity investors have increasingly become ex-investors in commodities, pulling out of long positions and even interest in the segment as some say the commodity boom is over.
That has had an impact on crop futures because speculative capital has often boosted and kept firm crop prices over the past decade. If that money stays away, then there is not much reason beyond supply and demand fundamentals that arise to be bullish crop prices in coming months and years.
The Canadian dollar at noon was US83.57 cents, up from 83.43 cents the previous trading day. The U.S. dollar at noon was C$1.1966.
Winnipeg ICE Futures Canada dollars per tonne
Canola Mar 2015 449.70 -0.90 -0.20%
Canola May 2015 443.90 -2.50 -0.56%
Canola Jul 2015 437.10 -3.50 -0.79%
Canola Nov 2015 425.40 -1.20 -0.28%
Canola Jan 2016 427.60 -1.40 -0.33%
Milling Wheat Mar 2015 216.00 unch 0.00%
Milling Wheat May 2015 219.00 unch 0.00%
Milling Wheat Jul 2015 221.00 unch 0.00%
Durum Wheat Mar 2015 361.00 unch 0.00%
Durum Wheat May 2015 351.00 unch 0.00%
Durum Wheat Jul 2015 341.00 unch 0.00%
Barley Mar 2015 195.00 unch 0.00%
Barley May 2015 197.00 unch 0.00%
Barley Jul 2015 199.00 unch 0.00%
