Wittal: Traders jump on bullish bandwagon

Technical difficulties left Brian Wittal’s Thursday market column unavailable May 7. It will appear in this space following the Friday column.

May 8 — It was a good finish to a strong week.

The continued bullish momentum in grain markets convinced traders to jump on the bandwagon and go along for the ride, so the markets continued to build on themselves.

Weather concerns, delayed seeding issues and crop inspection reports estimating varied and lower-than-last-year yields throughout U.S. wheat-growing regions have helped to push grains up further this week again.

Canola futures followed beans higher, even with the Canadian dollar moving up another 1.68 cents today (closing at US86.87 cents). Confirmed export sales to Pakistan and China helped to support futures.

Statistics Canada’s stocks report came in with canola stocks of 5.852 million tonnes, which is a record high, but below what the trade was anticipating, so this was also seen as friendly.

The Dow Jones closed up 165 points today; the U.S. dollar finished up one-10th of a cent.

Crude oil finished up $1.92, closing at US$58.63 per barrel for the day.

Corn finished up seven to 10 cents per bushel today, while beans finished up seven to 15 cents per bushel and wheat finished up 13-21 cents per bushel today.

Canola is up $1 to $6.10 per tonne for the day and barley is up $2 per tonne, closing at $145 per tonne.

The key will be what the weather does over the weekend in the U.S. Rain delays will push futures higher next week and nice weather will allow seeding to progress, which could start to force futures down off of these weather market highs.

Weather patterns are forecasted to remain unsettled throughout the central and northern Plains regions for the next couple of weeks before a warming trend moves in.

Remember, Mother’s Day is this Sunday; take the time to at least make a call even if you are busy in the field. It will be appreciated to know you cared. That’s all for this week. — Brian

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May 7 — Financial and energy markets started the day off on the upside but, as the day went on, drifted lower with nothing to really direct them in either direction.

Forecasted rains and concerns of further planting delays for corn pushed that market up.

This had a reverse effect on beans, as traders took profits from the market in anticipation of a shifting of acres from corn to beans.

Canola futures held steady and climbed a little, as the Canadian dollar dropped almost half a cent today and as news arrived that Pakistan had bought a cargo of canola yesterday and China was also looking to buy.

Wheat markets continue to inch upward as rain is forecast across a wide part of the northern Plains that will again delay seeding progress. It all depends on the amount of rain they get and the length of the supposed delay. Seeding is progressing rapidly when it can and if farmers can go at all, they will, as they are running out of time to seed wheat.

The Dow Jones closed down 102 points today, while the U.S. dollar finished up one-10th of a cent and the Canadian dollar was down 0.49 cents today to close at US85.19 cents.

Crude oil finished up 37 cents, closing at US$56.71 per barrel for the day.

Corn finished up three to five cents a bushel today, as beans finished down six to 16 cents a bushel and wheat finished up six to 12 cents a bushel.

Canola is even to up $2 per tonne for the day and barley is up $1.70 per tonne, closing at $143.

Nearby canola basis levels are still holding at very good values. New-crop basis levels are also historically attractive right now. Something to consider!

The Canadian Wheat Board’s new-crop fixed price contract (FPC) value today is $280.11 per tonne; the pool return outlook (PRO) is $283 per tonne. What should you do? How many acres will there be? What will world stock levels be at?

You can lock in the FPC but you can’t lock in the PRO until August when the EPO comes out and then there will be a cost to do that. Is this a profitable price for your farm? Are you comfortable locking in a portion of your production this early?

Remember that you can deliver a No. 1, 2, 3 or Canada feed against the contract. All you do is take the applicable grade deduction when you deliver so you aren’t at a risk that way. The only concern would be if you had no grain to deliver; then you would have to buy out the contract or trade it to someone if it had value.

Lots of questions for you to consider and answer based on your farming operation. Be safe in the field; think safety over yield!

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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