Dec. 31 — Outside markets are steady today and this is spurring some year-end buying in the grains.
Gold closed up $3.70 at $1,095.20 today, down $8.90 from last week’s close.
The U.S. dollar index closed unchanged today; the Canadian dollar, meanwhile, closed up 0.87 cents at US95.62 today, up 0.34 cents from last week.
The Dow Jones closed down 50 points at 10,440 today — down 26 points this week.
In the energy sector crude oil closed up eight cents at US$79.36 per barrel, up $1.31 per barrel this week.
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Corn closed up 0.6-1.6 cents a bushel today, up six cents a bushel over last week’s close.
Beans closed mixed, down 2.6 to up 4.4 cents a bushel today, up 40.2 cents a bushel this week over last.
Wheat markets closed down 2.6-6.2 cents a bushel today. Minneapolis March futures closed down 6.2 cents a bushel today, up 13.6 cents a bushel this week.
Canola closed up $1.40-$7.40 per tonne today, up $8.50 per tonne for the week.
Western barley closed $6.20 higher today at $160 per tonne, up $4 per tonne for the week.
Grain markets continue to bounce around, mildly, as limited activity kept most markets in very narrow trading ranges this week.
Marketing off-grade canola
I’ve had a request from a reader to talk about marketing options for off-grade canola, so here goes. There are a couple of things that are key to remember when marketing off grades, and the first is that every company will have different discounts for the different grades and/or percentage of damaged or heated canola.
It’s critical that you shop around and ask what those discounts are, and when you decide to sell your canola, ask if you can lock in the discount. Some companies won’t allow you to do that, and they will apply the discount the day you deliver the grain — which means it could change in the meantime.
Another question to ask is in regards to dockage and price. In the past, some companies have been known to deduct the percentage of dockage off of the price as well, which ends up being a double whammy against you.
Example: Your canola is a No. 3 with 10 per cent dockage, and the price you’ve agreed to after the discount for a No. 3 is $350 per tonne.
What would happen is that a further 10 per cent, or $35 per tonne, is also deducted off your $350, so now your net is $315 per tonne.
I haven’t heard of any of this happening lately, but when it did, it was most often with off-grade and damaged canola.
As far as who or where to market your off grades: crushers are always a good option, and right now crush margins are fairly decent so you may find them willing to be lenient on the grade and give you a bit of a break. They will usually have a better discount than the grain companies, as they have the ability to crush the canola and recapture the value faster than the grain companies, who can only blend the canola to try to recapture value.
But grain companies are also a very good option. Depending on your relationship with your grain buyers, they may be willing to help blend your off-grades and offer you a better discount. It’s all about negotiating with them as they have the ability to make any kind of a grade deal that they choose to, but you need to be prepared to offer them other business as well if you expect them to do something for you.
There are also a number of other buyers in the market that specialize in buying and selling off-grade and heated canola and other grains as well. You will find their ads on the internet and in many grain publications throughout Western Canada.
They have been known to offer some very good prices at times, depending on where they are able to sell the grain. In a year when there’s a lot of low-grade or feed grains around, it’s harder to sell off grades at a premium, so prices can vary greatly.
With off-grade canola it’s important to be contacting these buyers on a regular basis, as their demand and their prices can and will change on a daily basis as they find sales.
Before selling to any of these buyers it’s wise to ask if they are bonded through the Canadian Grain Commission. If they’re not, I would not suggest doing business with them, as you have no protection if the cheque they give you goes NSF. The last thing you want is to lose the entire load of canola and get nothing for it. You can always call the CGC in Winnipeg at 1-800-853-6705 to double-check if a specific dealer or grain company is bonded, just to be safe.
Bad idea
One thing with off-grade canola that I would not suggest is to try to blend it in with your good No. 1 canola at home and hope it doesn’t get noticed at the elevator when you deliver.
This can be very costly if you don’t get the grain blended properly. Or, if there is an odour, you could end up with the load going Sample and costing you much more than if you hauled in the off-grade separately, took a lower price for it and let the elevator do the blending.
The science behind grading and blending of grains is becoming very high-tech, so leave the job to the professional. In the end you will save yourself hassles, grief and money.
Grain marketing is somewhat like New Year’s resolutions. If you make unrealistic resolutions or target price goals it is not very likely you will achieve them. If you set realistic resolutions and/or pricing goals that you are happy with, then it is very likely you will achieve those goals and more, if you have a plan and a focus.
That’s all for today, this week and this year.
Here’s hoping 2010 will be an even better year for you than 2009.
Happy New Year! — Brian
— Brian Wittal has spent over 28 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.
