Commodities plunged today on worries that China will increase interest rates to cool inflation and in so doing reduce demand for commodities, including oilseeds and grain.
There are also concerns that China will sell some of its soybean, soybean oil and canola oil reserves to limit food inflation.
China’s inflation rate in October rose 4.4 percent from a year ago, the fastest pace in 25 months.
Policies to curb China’s overheated economy could reduce its demand for imported commodities, including oilseeds and grain. Investors took this as a signal to sell and take profits on recent price gains. Soybeans, corn and wheat in Chicago were locked down the limit. Canola posted sharp losses.
Concerns about government debt in some European countries caused an increase in the U.S. dollar, which rose against the Canadian dollar and other currencies.
On Thursday, Informa Economics lowered its forecast of U.S. 2011 soybean plantings to 75.8 million acres from 77.4 million. That compared to 77.7 million seeded acres last spring.
The analyst raised its forecast of U.S. 2011 corn plantings to 93.1 million acres from 90.4 million. That would be up from 2010’s 88.2 million.
The Canadian Oilseed Processors Association said its members crushed 124,238 tonnes of canola in the week ending Nov. 10, an increase of 1.2 percent from the week before. The crush is running about 600,000 tonnes ahead of last year at the same time.
In Winnipeg, the January contract fell $26.40 to $537.10 per tonne on 14,105 trades. The big drop today wiped out strong gains earlier in the week that flowed from the U.S. Department of Agriculture report that cut this year’s U.S. soybean ending stocks. On the week January canola fell $14.
The March contract on Friday fell $26.30 to $544 on 2,367 trades.
The November 2011 contract fell $29.40 to $486.70.
The previous day’s best basis widened to $30.13 per tonne under the January contract in the par region, according to the Winnipeg ICE Futures daily report.
The January contract RSI was 55. The rule of thumb is an RSI of 30 indicates an over sold market and 70 indicates an over bought market.
December barley futures were unchanged at $180.10 per tonne. March was unchanged at $185.
Chicago January soybeans fell 70 cents to $12.69 US per bushel. March fell 70 cents to $12.77.
December corn fell 30 cents to $5.34 per bu.
December oats fell 19 cents to $3.395 per bu. March oats also fell 19 cents to $3.52.
In New York, crude oil for December delivery fell $2.93 cents to $84.88 US per barrel.
The Canadian dollar at noon was 99.21 cents US, down from 99.83 cents the previous trading day. The U.S. dollar at noon was $1.008.
The TSX composite index fell 185.5 points to close at 12,749.24. The S&P 500 fell 14.33 points to close at 1,199.21.
