Feb. 11 — Markets have refocused on supply and demand and with the U.S. Department of Agriculture reports confirming large supplies on hand and slow export sales so far this year, traders are becoming a little more bearish toward the grains.
Speculative buyers are not real excited about commodities right now and are standing on the sidelines, which is another reason why these markets will continue to trade sideways to lower in the short term.
Crude oil has taken another hard hit, closing down $1.61 per barrel at US$35.94. This was the main reason oilseeds experienced losses today.
All other grains followed beans lower and will continue to do so until the numbers tell us something different.
Corn was down eight to 11 cents a bushel, beans were down 16 to 22 cents a bushel and wheat was down nine to 14 cents a bushel. Canola was down $2 to up $3 per tonne and barley finished down $3.80 per tonne for the day.
The Canadian dollar is up US0.49 cents, closing at US80.54 cents. This also added pressure on canola to drift lower today.
World ocean freight rates have been climbing the past two weeks on news of renewed interest in Asia and the Middle East for raw materials such as steel and coal.
Is this a short-term buy, or a start to a long-term correction?
If freight rates go up, this will no doubt impact commodity prices in North America as we fight to compete with foreign grains and now may face higher freight costs to ship to overseas customers.
Drought concerns in China may be worse than first reported, as the Chinese government is now looking at plans to irrigate 1.5 million acres of wheat in the drier areas.
We are building up for a very interesting three or four months on the world grain markets with all of these variables starting to appear. Which way it will go, nobody knows.
Focus on profitability and you will do OK.
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 a grain producers. He welcomes feedback and information on market conditions in your area, such as current offering prices, basis levels, trucking premiums and special crops contracts.