The meltdown in global stock markets following Standard and Poor’s downgrade of the U.S. credit rating dragged down crop futures on Monday.
November canola closed at $542.90 per tonne, down $12.60.
Wall Street indexes fell about six percent or the same as the total amount they fell last week. Investors appear to have lost confidence in the ability of American and European governments to solve their debt problems.
Also, fears mounted that a double dip recession is in the offing.
Ironically, despite the credit downgrade, investors crowded into the perceived safety of U.S. treasuries, helping to lift the U.S. dollar.
They also bought gold, causing it to soar to a new record high.
After the close, the U.S. Department of Agriculture reported that the good-to-excellent rating of the U.S. corn crop dropped two percentage points to 60 percent because of heat stress. That was more than expected.
Soybean good to excellent rating increased one percentage point to 61 percent.
Last year at this time corn and soybeans were 71 percent good to excellent.
USDA releases updated crop production outlooks on Thursday.
Brazilian analysts Agroconsult forecast soybeans area would reach 25 million hectares in 2011-12, up three percent from the 24.2 million hectares last season.
In a monthly report, the U.S. federal Climate Prediction Center forecast that “the majority of models” indicate neutral conditions into the fall.
Beyond the early fall, the forecasts are less certain. Half the models indicate continuing neutral conditions, however several models show a La Nina redeveloping. This is supported by the historical tendency for a weak La Nina to develop in the winter following a severe La Nina.
The La Nina in the past year was linked to the drought in the U.S. southern plains, the dryness early in Argentina’s soybean growing season and the heavy rain last December that severely damaged the quality of Australia’s wheat crop.
Winnipeg (per tonne)
Canola Nov 11 $542.90, down $12.60
Canola Jan 12 $550.80, down $13.20
Canola Mar 12 $555.00, down $13.30
Canola May 12 $558.10, down $13.70
The previous day’s best basis was $15 under the November contract according to ICE Futures Canada in Winnipeg.
The July contract’s 14-day Relative Strength Index was 34. The rule of thumb is an RSI of 30 indicates an over sold market and 70 indicates an over bought market.
Western Barley Oct 11 $205.00, unchanged
Chicago (per bushel)
Soybeans Aug 11 $13.0925, down 22.25 cents
Soybeans Sep 11 $13.045, down 23.5
Soybeans Nov 11 $13.115, down 24.5
Corn Sep 11 $6.7525, down 17.75
Corn Dec 11 $6.86, down 17.0
Oats Sep 11 $3.2975, down 5.5
Oats Dec 11 $3.415, down 4.75
Minneapolis (per bushel)
Spring Wheat Sep 11 $8.0525, down 22.25 cents
Spring Wheat Dec 11 $8.105, down 24.25
Spring Wheat Mar 12 $8.1925, down 26.75
Light crude oil nearby futures in New York fell $5.57 to $81.31 US per barrel.
The Canadian dollar at noon was $1.0111 US, down from $1.0160 the previous trading day. The U.S. dollar at noon was 98.90 cents Can.
The Toronto Stock Exchange composite index closed down 491.21 points, or 4.04 percent, to 11,670.96.
The Standard & Poor’s 500 Index slumped 79.92 points, or 6.66 percent, to 1,119.46, its biggest drop in nearly three years.
