July 9 — Financial markets were mixed to up slightly today as some of the earnings reports coming out from major companies such as Alcoa aren’t quite as bad as some were expecting.
The U.S. dollar dropped 0.9 cents today and the Canadian dollar rose three-quarters of a cent, closing at US86.18 cents, which is unchanged from last week.
The Dow Jones September quote closed up one point at 8,117 — down 124 points so far this week.
Crude oil closed up 27 cents at US$60.41 a barrel, down $7.32 from last week.
Corn closed up four to seven cents a bushel today and down two cents a bushel from last week.
Beans ended up down 24-35 cents a bushel today, and down $1.33 a bushel from last week.
Wheat closed up four to six cents a bushel on the various U.S. exchanges. Minneapolis July wheat futures closed up four cents a bushel today, down 13 cents a bushel from last week.
Canola closed up $2-$8 per tonne today, down $36.20 per tonne from last week. Barley closed down $2.50 at $162.50 per tonne, down $6.70 per tonne from last week.
Canola did find some support today, even with the dollar jumping three-quarters of a cent, as the trade sees the losses the last three days as being a bit overdone, so a mild rebound is inevitable.
Canola basis levels are continuing to jump up with reports of basis for new crop at the +$14 per tonne range in the Calgary area. The hard drop in the futures prompted companies to enhance their basis levels to try to attract tonnes for new-crop delivery.
If the futures rebound, you can expect to see a pullback, and once we are past the flowering stage in the canola and yields are a little more defined, I would suspect basis levels will again start to widen out as harvest approaches.
Doing some basis only for new crop is a very low-risk pricing strategy, especially when the basis is at these levels, which we have never seen before at this time of year.
Traditional harvest basis is between -$20 and -$60 per tonne across the Prairies, so if you can lock in your basis now for new crop at these levels you stand to put some extra profit in your pockets. It’s about price and risk management: think about it!
I am taking off tomorrow for a little break and will return July 21. That’s all from me until then. — 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.