The Good: There was little good in the equity or commodity markets today, but the Canadian dollar helped provide some consolation. The weaker loonie was driven by a strengthening U.S. dollar which moved up to 93.7, which is at the upper end of the 92 to 94 point channel that has been traded during the past two months. The move to the U.S. dollar is likely temporary as equity investors moved to safe haven assets. Cash appears to be king and the U.S. greenback is the leader of the safe currency trade. The weaker Canadian dollar also came in hand with a sell-off in the commodity space which means that it was a mixed blessing at the very best.
The Bad: Well it had to happen sooner or later. It just didn’t have to be so dramatic. The nearby canola contract dropped to C$526.40 per tonne, which is a small drop compared with the recent move higher in prices. No technical damage was done to the chart, but the drop is still disconcerting. The interesting thing is that strong overnight sales of U.S. soybeans occurred on the weekend. Soybeans were down 21 cents per bushel despite the fact that overnight sales of 435,000 tonnes were reported in the morning. Cheaper soybeans will only add to the coverage of buyers in the next few days.
The Ugly: The motto of the wheat market should be “easy come, easy go”. The wheat market had such a good week last week, which provided hope for improving prices this fall. Wheat buyers were slobber-knocked today as all of the gains of last week were erased by one dramatic move. One of the points to make is that nothing fundamentally changed today that made wheat 16 cents cheaper. It was all about money flow and nothing about supply or demand.