Wittal: Risk capital pullback will hit beans, canola

July 7 — World and U.S. financial markets were on shaky ground today as traders are becoming a little leery.

The second-quarter earnings report for the Standard and Poor’s (S+P) 500 companies that’s to be released Wednesday doesn’t sound like it will have any good news in it. Preliminary indications are to expect an overall combined 36 per cent decline in profits for the second quarter for the S+P 500, which prompted traders to take what risk capital they had invested out of the markets for the time being.

Beans is one of those markets where a lot of speculative capital has been invested over the past few months, so now this pullback is going to hit beans and canola hard.

The U.S. dollar rose a quarter of a cent today and the Canadian dollar dropped 0.16 cents, closing at US85.88 cents.

The Dow Jones June quote closed down 146 points at 8,131.

Crude oil closed down $1.12 at US$62.93 per barrel.

Corn closed down seven to nine cents per bushel today. Beans are down 58-67 cents per bushel today.

Wheat closed down two to nine cents per bushel on the various U.S. exchanges. Minneapolis July wheat futures closed down 2.4 cents per bushel today.

Canola closed down $9 to $12.10 per tonne today. Barley finished unchanged to close at $168.10 per tonne.

Canola tried to regain some of Monday’s losses right off the start of trading today, as the recent rains that have fallen in Western Canada are being referred to as being “too little, too late,” but when liquidation hit the bean markets again, canola could not stand the pressure and finished lower on the day.

The lack of any new export business has also been noticed and is also adding pressure on canola futures.

FlexPro deadline

The deadline for pricing any wheat that you may have on the 2008-09 FlexPro pricing program is 9 p.m. on Friday, July 31.

The 2009-10 CWB FlexPro tonnage sign-up period is from June 22 until 9 p.m. CT July 29. The FlexPro program provides for pricing throughout the crop year starting Aug. 1, 2009 until July 30, 2010. Farmers can commit tonnage to the program prior to July 29 and price a flat price in whole or part against the tonnage committed to the program throughout the crop year.

Two things to be aware of with this program:

  1. Early commitment of tonnage to the program before the new crop year starts. With the BPC or FPC, you can opt to use these contracts at any time up to Oct. 31, 2009. This gives you more time to know what your yield and/or grade will be before having to commit tonnes to a pricing program.
  2. With this program, the basis is set so you have no control over that portion of the price. With a Basis Price Contract you have the ability to lock in your basis when you choose to, as well as the futures.

Some food for thought.

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.

About the author



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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