Canola futures and other crops fell on Wednesday as markets added slowing growth in China to their list of troubles plaguing the global economy.
A monthly index released today of the activity of China’s manufacturing purchasing managers slumped in November to 48, the lowest since March 2009. A reading below 50 indicates contraction.
On Tuesday, the World Bank warned that China faces growing risks from the euro zone crisis and forecast that its economic growth will moderate from next year.
Soybeans fell more than 2.5 percent but a one-cent drop in the loonie cushioned canola’s fall. The U.S. dollar was rising against most currencies as investors sought security as global markets fall because of the debt crisis in Europe and America.
January canola settled at $505.80 per tonne, down $7.80. During the day canola fell as low as $504, the lowest point in 13 months.
The strong U.S. dollar and economic jitters also pushed down corn and wheat. Minneapolis fell more than Kansas City and Chicago as traders reduce what had become an unusually wide basis between the spring wheat contract and other wheat markets.
• A question in the market is whether these lower prices will start to attract buying interest.
A problem is that although prices are lower, the incentive that provides is offset by the fact the U.S. dollar has risen.
For example, the Indian rupee has fallen 17 percent against the US dollar from the high set in July.
• U.S. markets will be closed Thursday for their Thanksgiving so expect light trade in canola tomorrow.
• The China National Grain and Oils Information Centre expects 2011-12 (June/May) rapeseed imports to hit 1.8 million tonnes, up from 1.277 million tonnes in the previous year, because of expanded crushing capacity at facilities approved to accept Canadian canola.
Winnipeg (per tonne)
Canola Jan 12 $505.80, down $7.80 (-1.52%)
Canola Mar 12 $509.30, down $9.20 (-1.77%)
Canola May 12 $512.30, down $9.80 (-1.88%)
Canola Jul 12 $516.80, down $10.40 (-1.97%)
The previous day’s best basis rose to $9.25 under the January contract.
The January contract’s 14-day Relative Strength Index was 32. That tends to indicate that the market is oversold.
Western Barley Dec 11 $217.00, unchanged
Chicago (per bushel)
Soybeans Jan 12 $11.225, down 30.5 cents (-2.65%)
Soybeans Mar 12 $11.315, down 31.25 (-2.69%)
Soybeans May 12 $11.4025, down 31.75 (-2.71%)
Corn Dec 11 $5.8875, down 10.25 (-1.71%)
Corn Mar 12 $5.955, down 10.25 (-1.69%)
Oats Dec 11 $2.925, down 11.0 (-3.62%)
Oats Mar 12 $2.87, down 7.5 (-2.55%)
Minneapolis (per bushel)
Spring Wheat Dec 11 $8.3575, down 24.5 cents (-2.85%)
Spring Wheat Mar 12 $8.165, down 20.75 (-2.48%)
Spring Wheat May 12 $7.935, down 22.75 (-2.79%)
Light crude oil nearby futures in New York fell $1.84 to $96.17 US per barrel.
The Canadian dollar at noon was 95.42 cents US, down from 96.45 the previous trading day. The U.S. dollar at noon was $1.0480 Cdn.
The Toronto Stock Exchange composite closed down 223.48 points, or 1.89 percent, at 11,571.71.
The Standard & Poor’s 500 Index was down 26.2 points, or 2.21 percent, at 1,161.80.
