Wittal: U.S. dollar pressures U.S. grains

Jan. 20 — There was no party mood in the trading pits today. Grain futures markets took some hard hits today.

Concerns of further world economic problems are driving financial markets down and overseas investors are looking at the U.S. dollar as a safe investment option right now.

U.S. grain markets were down, due to the U.S. dollar rallying over 1.5 cents today and rains on the weekend in parts of Brazil, which were very beneficial for the bean crops there.

Wednesday the U.S. Department of Agriculture will bring out export inspection reports that are expected to be bullish, so it looks like traders decided to take profits out of the markets and run for now.

The large losses in beans spilt over into the corn, wheat and canola markets and pulled then down as well. Beans were down 28 cents per bushel, corn down seven cents a bushel, wheat lost 23 to 29 cents per bushel and canola was down $8 to $12 per tonne.

March canola futures certainly seem to have hit a resistance point at the $450 per tonne level.

The Bank of Canada lowered the prime lending rate by 0.5 per cent today, which sent the dollar down over one cent to close at US79.05 cents. This helped to keep canola from falling any further.

Crude oil traded anywhere from $4 down to $2 up, which also had influence on the oilseed markets.

The current warm weather in Western Canada is expected to bring on more farmer selling, which will also put pressure on futures to stay lower.

There are still concerns of dryness in key Argentine soybean areas that will continue to command the attention of the markets over the next few weeks.

This is the kind of choppy trading that we will continue to see from now until spring with unknown weather and economic uncertainties that can pop up at any time.

Plan for profitability and keep the emotional reaction out of your marketing decisions.

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. 

explore

Stories from our other publications