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May 28 — Financial markets came back to life today and regained some of yesterday’s losses.
The Canadian dollar was mostly unchanged for the day and ended up 0.07 cents, closing at US89.8 cents. The rally in crude continues to support the dollar as it pushes for the 90-cent mark and beyond. Analysts are calling for us to be at parity with the U.S. dollar in the next few months or sooner.
The Dow Jones June quote closed up 87 points today at 8,384, while crude oil finished up $1.63, closing at US$65.08 per barrel.
Corn finished up two to three cents per bushel today while beans finished down eight to up three cents per bushel.
Wheat finished down 12 to up six cents per bushel on the various U.S. exchanges today, while Minneapolis July wheat futures finished down 12 cents a bushel.
Canola finished down $1 to $3 per tonne for the day, while barley finished down $1.70 to close at $155.60 per tonne.
Improved weather conditions, a strong dollar and rumours that canola acreage will be larger than first anticipated for the coming year have canola under pressure. Crushers and export buying have faded away, which also signals the market that maybe canola is overpriced and needs to be readjusted in order to spark new sales business.
Rumours that China may be cancelling a couple of bean cargos were floating around the trading floor again and this put beans under pressure, which led to further pressure on canola.
Wheat’s roller coaster
Wheat markets were off to a good start today but as the day went on, weather reports for the weekend came in showing drier conditions for the U.S. Northern Plains region, which should mean more seeding will get done, which then led to some profit-taking on the Minneapolis futures. This then led to a pullback in the other wheat futures as well.
Over the last few weeks U.S. wheat markets have seen an influx of fund monies due to the fact that weather concerns are making these markets look rather promising. The key here is, when will they decide to pull out profits, and what will that do to the markets when they do? Will we end up with an overheated market and then, when they pull out, will we experience a supercooling that will be hard to recover from?
It all depends on how much money is invested and how fast it is taken out when they decide to liquidate. The roller coaster ride continues and the big drop is still ahead.
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.