Canola was caught in the downward commodities spiral Wednesday as traders reacted to weaker than expect readings of the U.S. economy and worries about China’s efforts to slow its overheated economy.
Traders believe if economies slow, there will be less demand for commodities.
The huge U.S. services sector last month grew at its slowest pace since August 2010 as higher gasoline prices cut into profits.
Traders believe China will take more measures to try to slow its economy, which is generating high rates of inflation.
Also weighting on oilseeds were the continuing harvest of the large South American soybean crop and slow U.S. soybean exports. Also seeding delays in the Midwest could eventually result in farmers shifting from corn to soybeans, although corn has a strong profit advantage over bean and there will be strong incentive to stick with corn.
Corn futures rose on a forecast for more rain in the Midwest next week that would further delay seeding.
Underlying support came from continuing dry weather in Germany and parts of France, which is harming canola yields.
Also, the forecast for showers in the central and northern Saskatchewan grain belt could continue to delay seeding here.
China today urged wheat growers to irrigate their crops because of a lack of rain.
Reuters reported that Russian weather forecasters do not expect a repeat of last year’s drought.
Winnipeg per tonne
Canola May 11 $554.70, down $8.10
Canola Jul 11 $560.50, down $3.20
Canola Nov 11 $557.00, down $3.50
Canola Jan 12 $564.90, down $3.40
The previous day’s best basis was $15 under the July contract according to ICE Futures Canada in Winnipeg.
The May contract’s 14-day Relative Strength Index was 43. The rule of thumb is an RSI of 30 indicates an over sold market and 70 indicates an over bought market.
Western Barley May 11 $200unchanged
Chicago (per bushel)
Soybeans May 11 $13.505, down 8.75 cents
Soybeans Jul 11 $13.52, down 11.75
Soybeans Nov 11 $13.385, down 15.75
Corn May 11 $7.265, up 7.5
Corn Dec 11 $6.6525, up 3.0
Oats May 11 $3.37, up 2.0
Oats Dec 11 $3.64, up 2.0
Minneapolis (per bushel)
Spring Wheat May 11 $9.23, down 20.5 cent
Spring Wheat Jul 11 $9.1525, down 17.0
Spring Wheat Dec 11 $9.27, down 17.5
Light crude oil nearby futures in New York fell $1.81 to $119.24 US per barrel.
The Canadian dollar at noon was $1.0483 US, down from $1.0537 the previous trading day. The U.S. dollar at noon was 95.80 cents Cdn.
The weakness in oil and other commodities pushed the Toronto Stock Exchange composite index down 81.05 points, or 0.59 percent at 13,611.32.
The Standard and Poor’s 500 index fell 9.30 points, or 0.69 percent, to 1,347.32.
