Feb. 3 — Yet another down day on the markets for grains, as continued rains in Argentina have set a negative tone in the markets. That, along with very little export activity in any of the grains the past two weeks, is setting a very bearish tone to the markets right now.
The U.S. Department of Agriculture’s monthly world supply-and-demand report is due next Tuesday. Expectations are for flat to lower usage this past month, which will not help bring down carryover stocks, so this will also add bearish sentiment to the markets.
Corn is down eight to 10 cents a bushel, beans are down 14 to 31 cents per bushel, wheat is down two to 12 cents a bushel, canola is even to up $1 a tonne and barley is up $6 to $11 per tonne.
Crude oil futures are up 42 cents to close at US$40.50 a barrel.
The Canadian dollar is up 0.74 cents, closing at US81.09 cents.
Rumors of new export sales being made today helped support canola futures in the face of a rising Canadian dollar and falling soybean futures.
The warm weather is expected to bring more farmer deliveries over the next week and that will no doubt be seen as being bearish going forward.
If canola can continue to make new export sales, the futures should hold steady but if sales drop off, canola will follow beans and that is not a pretty picture right now.
The recent rains in Argentina have traders feeling that the drought situation may be under control, so now the markets are going to refocus back on supply demand numbers for grains and use that as their guage for the next while as to where the futures should go, or until another weather scare comes into play to restart these markets again.
The numbers for all grains tell us there are enough stocks to get through to new crop easily, so barring further production loss issues somewhere in the world, prices are going to have a hard time going higher than present levels and will drift lower as time goes on to try to sell the inventory on hand before new crop arrives.
Sharpen your pencil, know your breakeven, price for profitability whenever you can.
That’s all for this 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.