Wittal: New-crop basis levels remain tight

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.

May 19 — Financial markets were somewhat subdued today. The only real story continues to be the Canadian dollar, as it rose again today another three-quarters of a cent. Strong crude values and bullish commodity prices continue to push the Canadian dollar upward.

Wheat started off mixed in the overnight trade and ended down for the day as some profit-taking was evident after yesterday’s gains. Weather uncertainties still loom, so the drop was limited due to that fact.

Beans found support from crude oil as it jumped $2.69 a barrel, and Egypt was in buying beans today which also helped push beans up. Continued strong export sales of beans will certainly reduce the U.S. carryover, which was previously predicted to be in excess of 110 million bushels and is now expected to come in at or just under 100 million bushels. With a smaller Argentinean crop expected, we should see beans hold firm for some time at these levels.

Canola did play catch-up today to some extent, as we did see beans make another double-digit rally today. The rising dollar is going to start to hurt canola futures sooner than later from a competitive price point perspective.

The Dow Jones July quote closed down 29 points today, at 8,475, while the Canadian dollar was up 0.78 cents today to close at US86.75 cents.

Crude oil finished up 62 cents, closing at US$59.65 per barrel for the day.

Corn finished up four to five cents per bushel today, while beans finished up six to 20 cents and wheat finished down 5.5 cents to up three cents per bushel on the various U.S. exchanges today.

Canola finished up $3 to $5 per tonne for the day and barley finished down 40 cents per tonne to close at $152.40.

New-crop basis levels are continuing to stay very tight as companies try to secure some tonnes for new-crop sales. November 2009 through May 2010 basis quotes range from -$3 per tonne to -$11 per tonne in the Calgary area and are reflective throughout the Prairies based on rail freight costs to port.

Seeding is wrapping up in some parts of the Prairies while other regions continue to struggle with delays. As producers come out of the field and start to deliver the last of the old-crop grain, we will probably start to see basis levels and possibly futures values back off as company demand is met by the renewed deliveries.

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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