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 Investor exodus sees canola prices plummet by $100/t 

Investor exodus sees canola prices plummet by $100/t

13/08/2008 4:16:00 PM
New season canola prices have dropped by close to $100 a tonne during August as the oilseeds market feels the exodus of investor money from the market.

ABB's forward contract cash prices delivered Geelong have dropped from $657/t on July 31 to $560/t this week – a move reflecting international trends.

ProFarmer managing director Richard Koch said the slide had little to with market fundamentals.

"It's a reflection of investors pulling out of soft commodities," Mr Koch said.

"We've seen the corn and soybean markets feel the brunt of that, which is why domestically there's been the fall in sorghum and canola values."

Last week saw further hits to futures markets, with the Canadian market dropping by $C45 after weakening the week before.

Mr Koch said that oilseed prices had not been helped by the big fall in crude oil prices, to which oilseed prices are correlated.

Weakness in demand has also meant that the market continues to take its lead from the exit of the managed funds.

"There's no urgent need to source product immediately, so the market is moving in tune with the investment dollars," Mr Koch said.

However, the slump may only have short-term implications – with Mr Koch saying it could be over by the time the Australian harvest commences.

He said it would only take one area of production concern around the world to see the market begin to trade fundamentals again.

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Comments


Date: Newest first | Oldest first
If the $A doesnt go back to below US80c, you are going to see serious losses in the farming sector.

Most material costs (fertiliser, diesel and chemicals) are double what they were a few years ago.

Labour costs increase. Water and government charges automatically increase by the CPI (so no need for them to become more efficient, unlike the rest of us).

Posted by terry on 14/08/2008 2:08:29 PM

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