Our daily online grain marketing columnist Brian Wittal 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.
Feb. 23 — A rough day in the financial markets, with the Dow Jones falling to lows not seen since October 2002; that, along with the U.S. dollar climbing higher, set the tone for markets today.
Crude oil fell $1.59 a barrel to close at US$38.44.
The Canadian dollar was down slightly closing at US79.9 cents.
The U.S. Department of Agriculture’s weekly inspection numbers for grains were disappointing at they all came in below expectations for the week.
Even with these negative factors, corn and beans were able to hold onto gains for the day, as was canola, as they were seen to have been oversold after last week’s losses.
A multitude of bearish news (financial markets, rains in Argentina, excess wheat supplies in India, the Canadian and U.S. dollars trading higher) last week kept the markets on their heels and traders weren’t in the mood to prop the markets up, so everything then fell to or below recent support levels.
From a technical perspective the charts for all grains show a distinct downward trend with no sign of breaking out. Market confidence needs to be rebuilt in all markets, but particularly in the financial markets, before any long-term positive trend change will occur.
So for the near future, grains will be dictated by supply and demand and the financial ability of the world’s buyers to buy our grain. With more than adequate supplies worldwide, buyers are picking and choosing, so our prices need to be very competitive if we are to bring down our stocks before next year.
The current value of grains reflects a competitive world market environment that will be with us until summer and beyond.
The recent downward slide for canola has reduced deliveries and this is starting to tighten supplies in the pipeline, which leads me to believe we will continue to see attractive basis levels being offered for the time being as companies try to secure stocks to cover sales.
This doesn’t mean we will see a big run in futures, as we are stuck in a downward trend at this time, but a $10- to $15-per-tonne retracement is not out of the question in the short term.
Corn was up one to three cents per bushel, beans were up nine to 13 cents a bushel, and wheat was down six to 10 cents a bushel. Canola was up $2 to $6 per tonne and barley finished up $1 per tonne for the day.
Recent market reports indicate a slight upward movement in fertilizer prices the past couple of weeks, with concerns and cautions to retailers and producers about production and availability issues come spring.
Not hard to read between the lines on this one. If you haven’t bought yet you may want to seriously consider doing so to ensure supply and price before a spring rally hits.
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 a grain producer.