A devastating earthquake and tsunami in northern Japan caused investors to rush to safe haven investments on Friday causing commodity futures, including crops, to fall.
There are at least a 1,000 dead and hundreds missing and many thousands homeless. The tsunami engulfed towns and devastated infrastructure such as ports, oil refineries and roads. The northern area is heavily industrialized. Luckily Tokyo escaped major damage. It will take a long time for the country to recover.
Overall it was a bad week for crop prices. May canola fell $39.50 per tonne or 6.6 percent from the previous Friday close.
May soybeans fell 4.1 percent, corn fell 6.2 percent and Minneapolis spring wheat fell 9.1 percent.
Downward pressure during the week came from improving conditions in the South American soybean and corn crops, as well as worries that the combination of Middle East unrest, high oil prices and now the earthquake in Japan, will cause global economic growth to stall.
Japan is one of the largest grain and oilseed importers in the world. To the end of January it was the largest buyer of Canadian canola and the fourth largest buyer of Canadian wheat by tonnage.
It is the United States’ largest corn buyer and a major wheat customer.
It was not clear how quickly Japan’s ports would reopen.
Markets were also on edge about protests in Saudi Arabia on Friday. Saudi Arabia is one of the world’s largest oil exporters. However, the protests were not as large as expected.
The Canadian Oilseed Processors Association said members crushed 117,340 tonnes of canola in the week ending March 9. That was up 12 percent from the week before and a nice recover from the previous week.
Winnipeg
Canola Mar 11 $554 per tonne, down $11.80.
March contract expires on Wednesday.
Canola May 11 $558.10, down $11.80
Canola Jul 11 $565.80, down $11.40
Canola Nov 11 $544.70, down $6.30
The previous day’s best basis was steady at $27 under the May contract according to ICE Futures Canada in Winnipeg.
The May contract 14-day Relative Strength Index was 35. The rule of thumb is an RSI of 30 indicates an over sold market and 70 indicates an over bought market.
Western Barley Mar 11 $194 per tonne, unchanged
Chicago
Soybeans Mar 11 $13.265 per bu. down 22.25 cents
Soybeans May 11 $13.345 down 21 cents
Soybeans Nov 11 $13.00 down 21 cents
Corn Mar 11 $6.5925 down 17 cents
Corn May 11 $6.6425 down 18.5 cents
Oats Mar 11 $3.455 down 5.5 cents
Oats May 11 $3.505 down 5.5 cents
Minneapolis
Spring Wheat Mar 11 $8.5325 per bu. down 23 cents
Spring Wheat May 11 $8.585 down 19.25 cents
Spring Wheat Dec 11 $8.77 down 18.25 cents
Light crude oil nearby futures in New York fell $1.54 to $101.16 US per barrel.
The Canadian dollar at noon was $1.0273 US, almost steady with $1.0276 the previous trading day. The U.S. dollar at noon was 97.34 cents Cdn.
The Toronto Stock Exchange composite index rose 35.67 points to 13,674.25. Investors were cheered as New York oil fell below $100. There were thoughts that Japan will have to buy raw materials to help in its rebuilding. Canada’s unemployment rate stayed at 7.8 percent in February.
The Standard & Poor’s 500 Index rose 9.17 points to 1,304.28. Retail sales in February rose one percent over the previous month.
On the week, the Dow and S&P 500 fell more than one percent, while the Nasdaq sank almost 2.5 percent.
