Canola and many crop futures ignored an otherwise dreadful day in world markets, rising slightly regardless of severe stress in the world economy.
Canola futures in Winnipeg rose $3.60 on the November contract to $573.00 and March futures rose the same to $591.50.
Canola has been strong recently, with relative cheapness compared to soybeans allowing it to follow soybeans’ recent rise in price and a rising U.S. dollar making the loonie-denominated canola futures contract look cheaper in greenback eyes.
Steady commercial demand is also helping, although many are beginning to wonder how strong buying support will remain now that many crushers are covered.
Crop futures have been generally strong recently, reflecting bullish supply and demand fundamentals, and have so far avoided being sucked down the toilet of outside market anxiety. Often agricultural futures mimic the rest of the commodities complex and often stock and bond markets too, but there was no sign of that Friday.
Friday Chicago corn and soybeans were modestly higher, Chicago and Minneapolis wheat were down moderately and the meats were split, with hogs rising and cattle falling.
Action in the Chicago pits was hesitant as traders await the Monday U.S. Department of Agriculture world supply and demand reports.
Stock, commodity, currency and debt markets revealed an anxious and fretful zeitgeist Friday, as the reality of a Greek debt default became overwhelmingly like. Credit default swaps on Greek government debt show that investors believe the country is 90 percent likely to default.
That won’t just bankrupt the Greek government, but cripple its banks and companies, who will not be able to get credit.
And major banks in Germany and elsewhere in the Eurozone are major holders of Greek debt, so a number of nations’ financial systems are bracing for a blizzard of asset downgrades, something that could produce a European financial crisis.
The grim mood in Europe robbed U.S. president Barack Obama of a joyful bounce of the markets following his announcement of $447 billion more in tax cuts and government spending to encourage employers to hire employees. U.S. markets were down hard Friday, responding to European stress, disappointing jobless numbers in the U.S. and Canada, and revealing a lack of willingness to believe that another round of “stimulus” spending would achieve anything more substantial than the underwhelming but bigger stimulus attempts already completed.
The Dow Jones Industrial Average fell more than 300 points, which was better than the four percent falls for both France’s CAC and Germany’s DAX.
Anxiety over galloping Chinese inflation also fed into this wicked witch’s brew of concern, severely undermining support for commodities.
New York crude oil fell more than two percent to $87.17 per barrel, industrial bellwether copper fell 3.5 percent, and natural gas fell 1.58 percent.
But both gold and silver fell, breaking the usual pattern on anxiety days like Friday. However, investors flocked to U.S. treasuries, taking the 10-year to a record low yield.
The Euro currency slumped to a 10 year low against the Japanese yen and a six month low against the U.S. dollar.
The greenback surged against the loonie, rising three-quarters of a percent, making all commodities look better in Canadian dollar terms.
Winnipeg (per tonne)
Canola Nov 11 $573.00, up $3.50
Canola Jan 12 $582.60, up $3.60
Canola Mar 12 $591.50, up $3.60
Canola May 12 $596.90, up $3.00
Western Barley Oct 11 $215.00, unchanged
Chicago (per bushel)
Soybeans Sep 11 $14.1650, up 9.25 cents
Soybeans Nov 11 $14.2675, up 8.50
Soybeans Jan 12 $14.3675, up 8.25
Corn Sep 11 $7.2600, up 2.75
Corn Dec 11 $7.3650, up 2.50
Oats Sep 11 $3.4825, down 5.00
Oats Dec 11 $3.4825, down 5.00
Minneapolis (per bushel)
Spring Wheat Sep 11 $9.4575, down 3.75 cents
Spring Wheat Dec 11 $9.0725, down 1.00
Spring Wheat Mar 12 $9.0400, down 2.75
The previous day’s best canola basis was $28.00 under the November contract according to ICE Futures Canada in Winnipeg.
Light crude oil nearby futures in New York dropped 1.81 cents at $87.24 US per barrel.
The Canadian dollar at noon was $1.0029 US, down from $1.0143 the previous trading day. The U.S. dollar at noon was 99.71 cents Cdn.
