Wittal: Rising U.S. dollar pressures grain futures

June 3 — Financial markets were under pressure in overnight trade and it carried on into the day trade. The U.S. dollar was up almost a full cent and this put pressure on grain futures and led to some large limit-down losses. Profit-taking was very evident as funds decided to take the money and run.

The Canadian dollar closed 2.26 cents lower at US92.26 cents today. The strong rebound in the U.S. dollar and the hard drop in crude prices pressured the Canadian dollar lower.

Crude oil finished down $2.43, closing at US$66.12 a barrel.

The Dow Jones June quote closed down 55 points today at 8,659.

Corn finished down 17-18 cents a bushel today, while beans finished down 27-36 cents. Wheat finished down 47-60 cents a bushel on the various U.S. exchanges today, while Minneapolis July wheat futures finished down 59.6 cents per bushel.

Canola finished down $2 to $3 per tonne for the day. The drop in the dollar is what kept canola from experiencing even larger losses, as beans and crude took rather large losses.

Barley finished up $5 to close at $165 per tonne.

A strong rally Monday followed by a lacklustre day yesterday made funds edgy, so they decided to take profits and run, which caused a landslide effect in all grains.

With limit-down moves in Minneapolis wheat today, I would suspect we will see this liquidation continue as traders try to squeeze the funds in a hard selloff.

The summer growing season weather rally will be very interesting this year!

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.

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