Oct. 2 — Energy and financial markets ended the day, and the week, in a negative mood.
The U.S. dollar fell a 10th of a cent today and conversely the Canadian dollar rose 0.11 cents today, closing at US92.35 cents, up three-quarters of a cent over last week.
The Dow Jones December quote finished down 46 points, closing at 9,425 today, down 14 points from last week.
Crude oil closed down 87 cents a barrel at US$69.95, up $3.93 per barrel over last week.
Corn closed down six to seven cents a bushel today, down only one cent a bushel from last week’s close. Beans closed down 20-33 cents a bushel today, down 41 cents for the week.
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Wheat futures closed down eight to 16.2 cents a bushel today. Minneapolis December wheat closed down 9.6 cents for the day and down eight cents a bushel for the week.
Canola closed down $7.70-$11.60 per tonne today, down $12.20 for the week.
October Western barley was up $1.60, closing at $106.60 per tonne. November futures closed up $1.60 per tonne as well, at $149.60.
Statistics Canada’s report did as was expected and showed strong increases in total production for all grains except oats. These numbers are expected to increase more in the December report, once the harvest is complete and a more accurate number can be determined.
Higher canola production numbers led to reduced buying interest, and with a stronger Canadian dollar on top of that, it forced prices lower in order for canola to remain competitive with beans, palm and European canola.
Markets are going to have a hard time pulling out of this slump anytime soon. The only real cure would be for an early onset of winter to strand some crop in the fields, thus driving prices up temporarily, but we don’t want to wish that on anyone, so it looks like we are going to stay at these lower levels for some time to come.
Total durum production in North America is going to be at a surplus level for a second year in a row, which means low values and slow movement for durum throughout the entire year. Producers can expect an A series acceptance of probably 60 per cent.
World demand is not really strong for durum right now, as many of the major buyers have good crops of their own to work through before they will need to buy durum from the U.S. or Canada. Our high dollar will certainly continue to pressure prices lower to remain competitive in this oversupplied market.
Time to store?
A lot of producers are talking of storing grain over for a year, waiting for prices to improve. I’m afraid it’s going to take two crop years to allow for a big enough shift in world acres to balance supplies, or for a crop wreck somewhere to bring prices back to more profitable levels.
So with that in mind, do you:
- store grain for one or two years, risking quality issues and hope for prices to climb,
- sell and get your money now and possibly look at reinvesting in options or futures to extract potential future value out of the markets and not have the storage risks, or
- sell the grain now and then do nothing more, saving the money you would spend on futures or options, and call it a day?
It’s not an easy decision and it’s different for each and every one of you, depending on your farm, your cash flow needs and your storage capabilities. But it’s something that needs to be penciled out carefully sooner than later.
That’s all for this week. — 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.
