July 23 — Financial markets showed some life today with steady gains in the indexes and the currencies.
The Canadian dollar continues to climb, with a gain of 1.09 cents to close at US92.07 cents.
The Dow Jones September quote closed down 158 points at 8,991.
Crude oil closed up $1.76 at US$67.16 per barrel.
Corn closed up 17-20 cents per bushel today; beans ended up five to 25 cents per bushel today.
Wheat closed up one to 10 cents a bushel on the various U.S. exchanges; Minneapolis September wheat futures closed up two cents per bushel today.
Canola closed mixed, down $1.40 per tonne to up $1.10 per tonne today.
Barley closed up $2 at $154 per tonne.
Weekly export inspection numbers for corn, beans and wheat were all within expectations, which was seen as a positive sign.
The U.S. Department of Agriculture announced today that it will resurvey the corn acres in the major growing states, after last month’s reported sharp increase in acres. This led to some aggressive short covering by speculators that pushed corn up with double digits today.
The continued surge of the Canadian dollar is hurting canola futures and will have a negative effect on Canadian Wheat Board returns as well if it stays at these 90-plus-cent levels.
The CWB’s 2009-10 new-crop pool return outlook (PRO) update was released today and the various wheat classes are down $13 to $17 per tonne, with durum down $14 to $18 per tonne and malt barley down $6 per tonne from the June PRO.
A No. 1 CWRS, 13.5 per cent, is down $13 at $273 per tonne, in store Vancouver.
A No. 1 CWAD, 13 per cent, is down $18 at $280 per tonne, in store Vancouver.
Select CW two-row barley is down $6 at $245 per tonne, in store Vancouver.
Wheat exports out of Russia, Poland and the EU are at record levels and are expected to continue at those levels for some time, as they have large old-crop inventories and are expected to harvest a better-than-average crop over the next few months.
The rising Canadian dollar is making it hard to remain competitive on the world markets without dramatically dropping the selling price, which is exactly what is being reflected in the PRO update released today.
The old-crop PRO was also updated today and wheat dropped $2 per tonne, durum increased $2 per tonne and malt dropped $3 per tonne. Again, the rising Canadian dollar and the dramatic drop in the wheat futures the past month have certainly been factors in these downward adjustments for old-crop.
If it looks like the PRO may continue to erode over the next few months, you may want to seriously consider using an early payment option (EPO) contract to lock in the PRO sooner than later. You can start pricing the EPO Aug. 1. Check the CWB website to see what the premium will be. It’s something to think about.
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.