Wittal: Speculative U.S. buying seen drying up

Nov. 18 — Financial markets were quiet and ended down slightly even with the U.S. dollar falling. Gold was steady to up today, closing at $1,141 on December futures.

The energy sector was mixed, with crude up marginally and natural gas down on the day.

U.S. grain markets started the day in a positive mood but ended with small losses as speculative buying interest disappeared.

The US dollar fell a quarter of a cent while the Canadian dollar closed down 0.42 cents today at US94.061 cents.

The Dow Jones December quote closed down eight points at 10,390 today.

Crude oil closed up 44 cents a barrel today at US$79.58.

Corn closed down 3.6 to six cents a bushel today while beans closed down 2.4 to 10.4 cents a bushel.

Wheat futures were down 8.4 to 13.4 cents a bushel today. Minneapolis December wheat closed down 11.6 cents a bushel today.

Canadian canola futures were up $1.90-$4.50 per tonne today.

January Western barley futures were unchanged, closing today at $157.50.

It looks like the speculative buying in U.S. grains may have dried up, as futures did open in a positive mood but soon stalled out, which then led to some selling and resulted in a small pullback in all U.S. grains today.

U.S. weekly export sales and shipment reports tomorrow will determine the mood of the markets and dictate what direction grains will go.

The Canadian dollar fell a further four-10ths of a cent today, which helped canola to close with small gains on the day.

It looks like this has been another little short-burst pricing opportunity, fed by speculative buying and weather uncertainties, that is stalling out as no one is prepared to push it any further without significantly more concrete information.

Reports out of Saudi Arabia say the government plans to reduce dramatically the acres seeded to wheat over the next few years, as the cost for water to grow the crop is way too expensive. It plans to buy the wheat it needs from the world markets as it feels it will be cheaper than growing it and using up vast amounts of its most valuable water resources.

Events like this could certainly change the long-term outlook for producers to continue growing wheat in the future.

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.

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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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