Most commodities, including canola, fell on Tuesday, pressured lower by India’s central bank’s decision to raise interest rates to fight inflation.
Investors are growing wary about the ability of commodities to rally in the face of increasing efforts by Asian governments to cool their red hot economies.
Traders were also shocked by word from Britain that its economy shrank 0.5 percent in the fourth quarter of 2010. Economic activity was hurt by sharp cuts in government spending and the harshest December weather on record.
The general gloom was partly offset by word that a monthly U.S. consumer confidence rating was at its highest since May.
Oilseeds also faced downward pressure due to rain this week in Argentina’s soy growing regions.
Wheat bucked the downward trend, supported by strong world demand and worries about dry conditions in the U.S. winter wheat crop.
March canola fell 1.3 percent, the most in two months.
However it faired better than soybeans, which fell two percent. Canola was supported by slow farmer selling, a weaker loonie and talk of new export business.
In Winnipeg on Tuesday, March canola fell $7.50 to $591.70 on 11,500 trades.
May fell $7.20 to $600.
The November 2011 contract fell $5.90 to $560.70.
The previous day’s best basis narrowed to $28 under the March contract according to ICE Futures Canada in Winnipeg.
The March contract 14-day Relative Strength Index was 54. 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 was steady at $200 per tonne.
Chicago March soybeans fell 30 cents to $13.745 per bushel.
March corn fell 11.25 cents to $6.44 per bu.
March oats fell six cents to $3.81 per bu.
March Minneapolis hard spring wheat rose 5.75 cents to $9.56 per bu.
In New York, crude oil for February delivery fell $1.68 to $86.19 US per barrel.
The Canadian dollar at noon was $1.0014 US, down from 1.0066 cents the previous trading day. The U.S. dollar at noon was 99.86 cents Cdn.
Canadian inflation in December came in at 2.4 percent on an annualized basis. Traders had expected 2.5 percent. This added to the belief that inflation is not getting out of hand in Canada and the Bank of Canada will not increase interest rates in the near term. That weighed on the loonie.
The Toronto Stock Exchange composite index fell 87.95 points to 13,259.
Standard & Poor’s 500 Index fell 6.06 points to 1,284.78.
