July 30 –– Equity markets showed a strong start again today and fell off somewhat, but still ended with positive gains for the day. The U.S. dollar fell just over a quarter of a cent today.
The Canadian dollar climbed up just over a third of a cent (0.38 cents) to close at US92.25 cents.
The Dow Jones September quote closed up almost 84 points at 9,154.
Crude oil almost regained the losses from yesterday, closing up $3.59 at US$66.94 a barrel.
A second unexpectedly large bean sale to China of 1.92 million tonnes was confirmed to have been made yesterday, so that sent beans up with strong double-digit gains right off the start of trade this morning and it pulled corn, canola and wheat to some extent along with it.
Weekly export shipments and sales for beans and corn were again above the weekly targets, so that also added support to the futures.
Weekly wheat sales numbers were up, but shipment numbers were disappointing and on top of that the U.S. wheat quality survey is estimating the spring wheat yields at 46.2 bushels per acre, up over last year’s 37.7 bu./ac. crop, which will only add more supply into the system.
Barley followed corn higher today, but there was very little if any activity on the barley futures, as buyers are sitting back to see how things progress through the rest of the growing season and into harvest.
Canola followed beans higher and was supported by the gains in crude oil but the rising Canadian dollar is still going to be a concern for canola going forward. I expect we may lose these gains tomorrow as we head into the long weekend with the Canadian markets closed Monday and the U.S. open.
Corn was up 11-15 cents per bushel today; beans ended up 48-71 cents per bushel.
Wheat closed up one to five cents per bushel on the various U.S. exchanges. Minneapolis September wheat futures closed up 1.2 cents per bushel today.
Canola closed up $7-$17 per tonne today. Barley closed up $14.80 per tonne, at $155.20.
Some things to be aware of when considering deferring payments for your grains you have delivered. If you are going to defer payment for grains, the safest is to only defer CWB grain payments, as the Canadian Wheat Board holds that money and does not release it to the grain company that cut you the cheque until the deferral date. If something were to happen to the company between the date you received the cheque and the deferral date on the cheque, your money is securely with the CWB. It’s important to make sure and deposit the cheque ASAP after the deferral date to ensure you get your monies.
With all other grains, the risk with deferring is far greater, as you are relying on the grain company’s ability to pay or their bond to be big enough to cover any outstanding debt owing if they should become insolvent. The major grain companies are bonded, but not all smaller companies or special crop handlers or grain traders are bonded.
Before dealing with any smaller companies or traders, ask them if they are bonded and insist on seeing proof. Bonds may not always cover the entire debt of a company — for example, if the bond is $1 million and they have $2 million of grains purchased at harvest and then they go broke, you may get back 50 cents on the dollar.
So deferring of payment on non-board grains can be a lot riskier, as a lot can change for a company in six or nine months if that’s how long you defer, then when you go to cash the cheque you could be at a loss if the company has filed for bankruptcy in the meantime.
There are also further details on the CGC website about what is covered under the Canada Grain Act as far as payment protection for producers is concerned, and the process to follow if you are not getting paid for your grain.
Check it out: it may save you a lot of hassle and money in the future.
It’s your business, stay on top of it.
That’s all for today. — Brian
— Brian Wittal has spent over 27 years in the grain industry, including as an elevator manager and producer services representative for Alberta Wheat Pool, a regional sales manager for AgPro Grain and farm business representative for the Canadian Wheat Board, where he helped design some of the new pricing programs. He also operates his own company providing marketing and risk management advice for Prairie grain producers. Brian’s daily commentaries focus on how domestic and world market conditions affect you directly as grain producers.
Brian welcomes feedback and information on market conditions in your area, such as current offering prices, basis levels, trucking premiums and special crops contracts. Contact Brian today.