Markets recover off recent lows

Futures markets have recovered sharply since the lows established in the days leading up
to the August 12th United States Department of Agriculture (USDA) report. Corn, canola,
wheat and soybean futures prices have moved $1 – $1.50 per bushel higher in less than
two weeks. Oats are up a bit as well, although not to the same extent.

A few things have come together to cause a shift in market sentiment. Hot, dry weather
in the U.S. Midwest is taking its toll on crop conditions, and there are reports of some

soybean fields running into disease problems.

What’s more, the crop is behind and still at
risk of getting hit with an early frost before making it into the bin. Much of the
speculative liquidation that took place through July and early August has subsided, as
well. The market is also looking ahead to the need for virtually all crops to protect and, in
some cases, increase seeded area for 2009.

The outlook for western Canadian crops will become clearer in the coming weeks as
more harvest results come in. Early yield reports are generally quite good, but it’s still
uncertain if this will be offset by those parts of the Prairies that have struggled.

Any
surprises in the August 22nd Statistics Canada report could impact the market, either
through futures or basis values. Prices for all crops will continue to be heavily influenced
by the corn and soybean markets in the U.S.

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