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Wittal: Traders play it safe

Jan. 29 — It was another off day, with all grains ending up negative. Corn is down two to three cents a bushel, beans are down three to 13 cents a bushel, wheat is down 16 to 18 cents a bushel, canola is down $2 to $3 a tonne and barley is down $7 per tonne.

With little or no export sales happening this past week, and with China on a week-long holiday, markets have been very soft all week.

Mixed weather reports for South America are still a concern for the time being, so no doubt traders are playing it safe and pulling back a little before the weekend.

The nearby crude oil futures fell back 72 cents to close at US$41.44 per barrel.

The Canadian dollar finished down slightly, closing at US81.83 cents.

With crude and the dollar down, that helped keep canola from falling further than it did.

Financial markets were on the defensive today, with the news from some of the major petroleum companies such as Royal Dutch Shell and Petro Canada of large fourth-quarter losses for last year. Ford reported a Q4 loss as well, which didn’t help the markets either.

U.S. weekly grain inspection reports came out this morning for the past week and the numbers were very poor, meaning not enough of any of the grains were shipped this past week to keep pace with the U.S. Department of Agriculture’s predictions for the year. If these numbers don’t improve it will mean a larger carryout of grains into next year, which will not help support prices going forward.

Expectations are that upon China’s return to the markets next week, export sales will rebound back and that should help grain futures regain some of the past week’s losses.

With nothing really positive on the horizon for grains at this time, markets will tend to remain negative until something happens to change traders’ minds that we may be heading for a world production shortage next year.

With no clear direction in the markets, down is the easiest and safest way to go.

That’s what traders are saying to themselves right now!

That’s all for this 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.

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