Wittal: India’s bumper crop may pressure wheat

Markets were mixed to steady today with financial markets off slightly, the U.S. dollar down and crude oil up almost $5 a barrel to US$39.48. The Canadian dollar was up slightly for the day, closing at US79.65 cents.

U.S. grains posted modest gains for the day with wheat leading the way.

Canola is considered to be overpriced compared to beans right now, so I don’t expect we will see canola move much until beans strengthen further to make canola look more attractive from a buyer’s perspective.

Corn was up four to seven cents a bushel; beans were down three to up nine cents a bushel on the forward months; wheat was up seven to 13 cents a bushel.

March canola was up $1.30 per tonne, forward months were down $2 to $4 per tonne and barley finished up $2 per tonne for the day.

Reuters reports that India, the second largest wheat-growing country in the world, will be in a position to export one to two million tonnes of wheat this year for the first time since 2003-04, due to a bumper crop this past growing season. This just adds to world inventories possibly depressing wheat prices further.

I read an article out of the U.S. talking about producers using flex land rental agreements more often now to try to better manage risk and reduce upfront cash costs.

A flex rental agreement starts with a lower base price per acre for rent that factors in an average yield and then has an upward sliding payment scale based on actual yields, so if it is a good year the landlord gets an additional payment based on the above-average yield. I have not seen the actual details of a contract to know how the base rent is determined or the upward scale values that are used.

I guess what I want to point out is that there are better ways to negotiate a rental agreement than just a flat per-acre upfront payment, so depending on your situation, don’t be afraid to look at something a little bit different that can have benefits for both parties. Set the parameters that you and the landlord are comfortable with.

Try it for a year and see how it goes. 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 producers. He welcomes feedback and information on market conditions in your area, such as current offering prices, basis levels, trucking premiums and special crops contracts.

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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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