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Wittal: Speculators return as U.S. dollar slips

Nov. 25 — Markets were buoyed by the continued surge in gold values and the drop in the U.S. dollar. This was enough to embolden speculators to re-enter the markets ahead of the U.S. Thanksgiving holiday and take positions in anticipation of further drops in the U.S. dollar over the next few weeks.

The U.S. grain markets followed the momentum in the outside markets, led by gold and the energy sector, to post solid gains across the board. The falling U.S. dollar makes grains look more attractive to buyers and rumours of new sales helped support futures.

Canola followed beans upward in the morning and a drop in the Canadian dollar helped canola to close the day with small gains.

Gold was up $21.20 today, closing at $1,187.00.

The U.S. dollar fell back seven-10ths of a cent today to an 18-month low. The Canadian dollar closed up 1.09 cents today at US95.64 cents.

The Dow Jones December quote closed up 37 points at 10,442 today.

Crude oil closed up $1.94 a barrel today at US$77.96.

Corn closed up 15-16.6 cents a bushel today while beans closed up 8.4-14.6 cents a bushel.

Wheat futures were up 10-19 cents a bushel today. Minneapolis December wheat closed up 17.2 cents a bushel today.

Canadian canola futures were up $4.90-$9 per tonne today.

January Western barley futures were down $3.30, closing at $156.60 per tonne today.

The union representing 1,700 CN engineers has come out stating it will start strike action as early as this weekend if CN does not return to the bargaining table to resume negotiations.

Reports out of Australia are saying pretty much the same as what’s being said in Canada in regards to world wheat stocks and export sales opportunities.

It’s going to be a very tough market this year for Australian wheat producers as the large supplies of wheat worldwide are going to make it harder to sell wheat into world markets. Another factor they also have to contend with is a rising dollar, which makes their wheat more expensive on the world markets, which means lowering their price in order to sell, which means less in the end for the producer. Sound familiar?

The concern I have is that Australia produces high-quality wheat, the same as Canada, and they are closer, freight-wise, to some of the key Asian markets for high-quality wheat, which will put Canada at a distinct pricing disadvantage, especially if freight costs rise during the year. The only answer is for us to lower our selling price to get the buyers to buy our grain if they have to pay more freight to get it home as opposed to buying from Australia.

Another reason why we may see Canadian Wheat Board pool return outlook (PRO) values come under pressure the next few months.

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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