Wittal: Fund money driving futures values further

Our online grain markets columnist Brian Wittal 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.

June 1 — Financial markets showed some strength today and ended with solid gains. The Canadian dollar closed another four-tenths of a cent higher at US91.80 cents today on the continued strength of crude oil and commodity prices.

The Dow Jones June quote closed up 200 points today at 8,688, while crude oil finished up $2.27, closing at US$68.58 per barrel.

Corn finished up six to 10 cents per bushel today, while beans finished up 23-35 cents per bushel today. Wheat finished up 23-39 cents per bushel on the various U.S. exchanges today, while Minneapolis July wheat futures finished up 23 cents per bushel.

Canola finished up $8 to $11 per tonne for the day. Concerns of dryness in Western Canada, and the need for a rain soon, supported canola for most of the day, but the rising dollar forced futures into negative territory by the end of trade.

Barley finished down $3.40 to close at $157 per tonne.

Fund money continues to be pushed into the grain futures, pushing values beyond what some feel the fundamentals can sustain. Weather concerns and yield adversity are driving this fund-fueled rally, so it will be interesting to see how fast and how far it can go before there is a crash.

Let’s hope we don’t give it all back on a “Turn-around Tuesday” tomorrow.

Petroleum analysts are advising producers to seriously look at purchasing their harvest fuel needs now, sooner rather than later. This recent rally in crude oil is expected to continue, especially if the recent signs of economic optimism and renewal spark a crude oil rally. Renewed consumer demand for products from abroad will need crude to power vessels to transport goods around the world, which will in turn drive up futures values.

Western Canadian crops are estimated to be 92 per cent seeded to date, with the majority of seeding yet to be done in the flooded regions of Manitoba, where some of the ground will not get seeded as it is still underwater.

Unseasonably cool weather will frost warnings at night in June are not a good thing right now, with crops late and very vulnerable.

If the weatherman is listening, we need rain and heat soon to get things back on track.

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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