A sharp decline in the Canadian dollar helped to push canola futures to a 25-month high on Tuesday, but other crop prices fell.
The loonie fell after the Bank of Canada cut its forecast for growth next year to 2.3 percent from 2.9 percent, making it less likely that the bank will raise interest rates.
The falling loonie improves the margins of Canadian canola crushers and they were strong buyers during the day.
Also, the wide basis in canola discouraged deliveries, reducing the need for grain companies to hedge.
The loonie was also pressured lower when China unexpectedly increased its interest rates. The move was designed to tap the brakes on China’s booming economy that threatens to overheat. If China’s economy slows it would slow demand for commodities and as a result, the price of crude oil, metals, corn and other commodities fell.
Oil dropped more than four percent and corn fell more than two percent, but soybeans dipped only slightly because the trade believes China will still have a voracious appetite for the oilseed.
Equities also fell.
In Winnipeg, November canola rose $4.40 per tonne to $505 on 10,787 trades.
The January contract rose $3.40 to $511.80 on 9,075 trades.
The previous day’s best basis narrowed slightly to $19.33 per tonne under the November contract in the par region, according to the Winnipeg ICE Futures daily report.
The 14-day Relative Strength Index for November was 68 according to BarChart.com. 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 per tonne. March was unchanged at $185.
Chicago new crop November soybeans fell four cents to $11.80 US per bushel. January fell 3.5 cents to $11.915.
The weakness in corn pushed December oats 17 cents lower to $3.45 per bu. March oats fell 16.75 cents to $3.5575. Oats have fallen about 10 percent since Oct. 13.
In New York, crude oil for November delivery fell $3.59 to $79.49 US per barrel.
The Canadian dollar at noon was 97.11 cents US, down from 98.53 cents the previous trading day. The U.S. dollar at noon was $1.0298.
The TSX composite index closed at 12,570.55, down 97.46 points. The S&P 500 fell 18.81 points to close at 1,165.90.
