Wittal: Falling dollar halts canola’s slide

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. 27 — More negative news out of the U.S. and Canada in regards to gross domestic product numbers and, of course, the continued Citibank saga in the U.S. sent markets tumbling today.

The U.S. dollar jumped up a quarter of a cent today as investors looked to the dollar as a safe haven.

Crude oil dropped 46 cents a barrel to close at US$44.76. The Canadian dollar was down 1.3 cents to close at US78.78 cents.

Corn was down 11 to 12 cents a bushel, beans were up five to down 12 cents a bushel, and wheat was down one to four cents a bushel.

Canola was down $4 to $12.40 per tonne, and barley finished down $1 to $3 per tonne for the day.

The nearby March canola contract fell the hardest, as that contract expires and the rest of the forward futures months only fell $4 to $6 per tonne. They could have fallen even further, had it not been for the drop in the Canadian dollar that helped to support it at these levels.

Hope for next week is that these low levels will bring buyers back into the markets, which should help futures to retrace some of this week’s losses. Hopefully!

The Canadian Wheat Board came out with its 2008-09 pool return outlook (PRO) update and wheat and malt barley were left unchanged, while feed barley values in Pool B were up $7 per tonne.

Reports out of Brazil are that the drop in fertilizer prices the past few months and the recent rains in some regions have renewed farmers’ interest in planting second-crop corn.

This has pushed fertilizer sales up almost 40 per cent from December to January and it’s expected that farmers there will purchase a good portion of their yearly fertilizer needs in the first half of this year before the big world demand kicks in and prices are readjusted.

Brazil is expected to consume 22.4 million tonnes of fertilizer this year, which is roughly the same as last year and down 10 per cent from the record in 2007 of 24.6 million tonnes.

Spring fertilizer demand is starting to build and that makes me ask: When will the production plants start to ramp up? Or will they delay because of demand uncertainty?

With a lower Canadian dollar we will be at a disadvantage when buying on the world market and consequently, Canadian supplies will look very attractive on the world market for the same reason. Ensuring supply may be the key reason you want to consider prepurchasing before spring if you haven’t already.

Enjoy the weekend. — 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 producers.

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Brian Wittal

Brian Wittal has 30 years of grain industry experience and currently offers market planning and marketing advice to farmers through his company Pro Com Marketing Ltd.

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