Wittal: Speculators’ liquidations have begun

July 6 — World and U.S. equity markets struggled overnight and finished mixed to down for the day. U.S. employment numbers showed more jobs lost than expected and this pressured the equity markets and the currencies today.

The first part of July is historically when the soybean markets usually take a bit of a drop due to growing weather and projected new-crop production numbers, so to that end, the speculative side of the corn and bean markets decided to start liquidating their positions today. This just fed on itself and took corn and bean futures down hard, which filtered into the wheat and canola futures as well.

Hard-falling crude futures and rains over the weekend throughout parts of the Prairies also added a very negative tone to the canola markets, on hopes that an average yield can still be had in Western Canada if it keeps on raining as we enter the critical flowering stage for canola.

Weekly U.S. inspection numbers for beans were good but corn and wheat were both well below expected or needed numbers to hit the U.S. Department of Agriculture’s projected yearly sales targets. This also added pressure on the grain futures, as old-crop carryover stocks continue to increase as exports back off, meaning more supplies for next year.

The U.S. dollar fell a quarter of a cent today and the Canadian dollar dropped 0.09 cents, closing at US86.04 cents.

The Dow Jones June quote closed up 41 points at 8,322.

Crude oil closed down $2.68 at US$64.05 per barrel.

Corn closed down two to 17 cents per bushel today.

Beans are down 35-43 cents a bushel today.

Wheat closed down six to 14 cents a bushel on the various U.S. exchanges. Minneapolis July wheat futures closed down 6.4 cents a bushel today.

Canola closed down $22 to $23 per tonne today.

Barley finished down $1.10 to close at $168.10 per tonne.

Continued rains and improving growing conditions have market speculators on edge and today we see them start to liquidate futures positions to extract profits, or to cut losses in what is now considered to be a more bearish weather market.

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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