Wittal: Wheat rallies on export demand, weather

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April 2 — Hype around the G20 Summit and hopes that they are going to come up with a master plan to help solve the world economic crisis has financial markets around the world rallying, on hopes that such a master plan can and will be crafted.

The Dow Jones closed up 216 points today. The U.S. dollar finished down one 10th of a cent; the Canadian dollar is up 1.38 cents to close at US80.81 cents.

Crude oil finished up $4.25, closing at US$52.64 per barrel.

Corn finished up six to seven cents a bushel, beans are up 22-27 cents a bushel and wheat is up 15-25 cents a bushel. Canola is up $5-$10 per tonne and barley finished up $3.70, closing at $146.50 per tonne.

Strong weekly export sales and shipment numbers for beans, and surging crude oil futures, helped to push beans into solid double-digit gains today.

This helped to push canola futures up as well, but the rising Canadian dollar put a bit of a damper on the upward momentum.

Corn’s weekly export numbers were also well above weekly averages to keep on pace with the U.S. Department of Agriculture’s year-end estimates, which helped to support corn and allow for small gains.

Wheat’s export numbers were above the weekly average needed to meet year-end targets as well. Add to that the continued weather concerns of rain and frost in the U.S. wheat-growing regions and you have the makings for a strong double-digit rally day.

It looks like western Canadian primary agriculture is going big-time corporate! Reuters reports that a million-acre grain and cattle farm planned by Sprott Resource Corp. represents a “fork in the Prairie road for Canadian agriculture,” at which the farm’s CEO says family farms have “more to gain than fear.”

Sprott, a Toronto investment firm, plans to spend $27.5 million to launch One Earth Farms on First Nations land in Saskatchewan and Alberta. The new farm’s CEO, Larry Ruud, said the scope of the investment “speaks volumes about the optimism that exists looking ahead to the future of agriculture” and noted “this industry has been looking for additional capital.”

With One Earth expecting to control so much farmland, Ruud admitted to Reuters that many other farms which now include leased land may see their seeded acres shrink.

There are 18 First Nations in the two provinces that have signed letters of intent to lease up to a million acres to the project. Most of that land has already been in production, Reuters noted.

Management said it would start farming in a “hub and spoke” system, designed to seed crops and ranch lands in annual increments, beginning with an initial minimum target of 50,000 acres in the first year of operations. This year, Ruud told Reuters, seeding will include canola, spring wheat and barley.

Reuters also quoted Derek Brewin, an assistant professor of agriculture at the University of Manitoba, as saying a corporate farm’s negotiating leverage may end up supporting prices for all farmers.

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.

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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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