Loonie dropped, tensions rose
The loonie dropped as tensions continue to increase over the arrest of a Chinese business executive for possible extradition to the United States.
The story should be watched closely by canola growers. In fact, by the overall Canadian agricultural sector.
The Chinese government says Canada will face “serious consequences” if the executive is not released from a B.C. prison immediately.
Canadian business reaction
The warnings of serious consequences have spooked Canadian companies that deal with China. They’re worried for their employees who work in China, and know that rules could change at any moment which could shut down trade or make it prohibitively expensive to do business.
Canada seems stuck in the middle, and so far, there are no indications from China of what the consequences might be.
In a CBC report earlier this week, David Mulroney, Canada's former ambassador to China, says China appears ready to make an example of Canada in order to get the United States to co-operate in the matter.
Exports to China
Canola price charts remain constructive short-term but overhead technical resistance above needs to be overcome soon if bulls want to keep an upward price bias ongoing.
Chart support on the nearby January canola contract is near the $482.50 per tonne level (short-term) and then again down at last week’s reaction lows of $478.30. Overhead resistance remains at $490 per tonne, which about coincides with the 50-day moving average.
Source : fcc