July 22 — Financial markets were rather quiet today, with limited trading volumes and little movement either way.
The Canadian dollar continues to climb, with a gain of 1.56 cents to close at US91.04 cents.
The Dow Jones September quote closed down 53 points at 8,833.
Crude oil closed down 21 cents at US$65.40 per barrel.
Corn closed down two to four cents a bushel today; beans ended up two to four cents a bushel.
Wheat was mixed, closing down 15 cents to up three cents a bushel on the various U.S. exchanges. Minneapolis September wheat futures closed down 2.2 cents per bushel today.
Canola closed down $3.40-$4.30 per tonne today.
Barley closed down 40 cents at $152 per tonne.
It was a very quiet trading day today, as no news of interest was reported that would encourage traders to step into the grain markets today.
Recent reports indicate world wheat production is estimated to be the second-highest ever and will exceed demand for the second consecutive year in a row, which means world wheat stocks will climb to historically high levels in absolute terms.
The Canadian Wheat Board will come out with its pool return outlook (PRO) update tomorrow. Given the current world situation and the rising Canadian dollar, I’m expecting the PROs to fall $10 per tonne and maybe more.
Get your old-crop wheat delivered and priced in the old crop, as it looks like the new-crop values could end up a fair bit lower, so you really don’t want to be carrying much, if any, old crop over into the new crop year.
The 2008-09 PRO for a No. 1 CWRS (13.5 per cent) is $306 per tonne, in store Vancouver. This PRO value is pretty solid as the year is at an end, so it shouldn’t change much if at all.
The 2009-10 PRO for a No. 1 CWRS (also 13.5 per cent) is $286 per tonne, in store Vancouver. This PRO value will no doubt fluctuate over the next several months as the world wheat situation continues to change going into harvest and beyond.
Currently the new-crop Fixed Price Contract (FPC) value for No. 1 CWRS, 13.5 per cent, is $230.68 per tonne, which is $55 per tonne less than the PRO, which tells me you should sit back and do nothing for now as far as pricing is concerned, as the PRO is still the better option for now.
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.