Canola takes three percent plunge

Canola followed soybeans and the generally dour world zeitgeist Thursday, dropping almost three percent or about 40 cents per bushel in some futures contracts.

That’s not as bad as U.S. soybeans, whose nearby futures contracts fell 50 cents per bu.

Soybean oil, which is canola’s bellwether, fell more than two percent.

The driver of the losses seems to have been a risk-off attitude in markets, which are fretting about U.S. jobless claims that suggest more people have started seeking work than have found it recently, about more evidence that China is stumbling and about the ever-present reality that Europe might just implode one day.

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The crop supply issues that dominated the weather markets of summer have been replaced by anxiety over the level of demand for agricultural commodities.

Most commodities slipped by late Thursday, with the only commodity class escaping red ink being the energies, and that was seen as a corrective recovery to the sharp sell-off in crude oil in recent days.

Grains were the weakest of the commodity classes, but among those the veg-oils were the weakest. Wheat was much stronger, hovering around flat, mostly avoiding the sucking power of the soybean vortex.

People who want to attribute crop-specific fundamental causes to the weakness of soybeans and canola and the relative strength of wheat pointed to harvest pressure, slow sales and challenges to wheat production overseas.

On down days at this time of year, fundamentalists tend to attribute canola weakness to harvest pressure. On up days they will instead notice seeds lost to windstorms and smaller than expected crops.

People of a more technical bent attributed most of the crop weakness Thursday to a medium-term corrective motion in crop futures. Wheat’s seeming strength was more of a correction to over oldness from recent losses than a vote of independent strength, some said. Similarly, soybeans have been slipping after the incredible run-up in prices, but Wednesday saw a correction to the strength of that short-term move. Thursday saw a return to the intermediate trend.

The Bank of Canada noon rate for the loonie was $1.0234 US, down from $1.0262 the day before.

The U.S. buck was 97.74 cents Cdn.

Winnipeg (per tonne)

Canola Nov 12 $617.40, down $17.20 -2.71%

Canola Jan 13 $620.70, down $17.50 -2.74%

Canola Mar 13 $620.00, down $18.30 -2.87%

Canola May 13 $610.20, down $16.30 -2.60%

Milling Wheat Oct 12 $295.50, up $1.50 +0.51%

Milling Wheat Dec 12 $301.30, up $1.50 +0.50%

Milling Wheat Mar 13 $310.80, up $1.50 +0.48%

Durum Wheat Oct 12 $310.10, unchanged

Durum Wheat Dec 12 $314.60, unchanged