Wittal: U.S. greenback jumps, U.S. grains drop

Jan. 20 — The big surprise today was the unexpected, aggressive move by the U.S. dollar to jump more than a full cent in trading today, which shocked markets and took a bit of a toll across all markets. This in turn sent the Canadian dollar lower by 1.5 cents today.

Gold, crude oil and financial markets all ended lower due to the pressure from the rising U.S. dollar. U.S. grains were sent lower because of the dollar as well.

Corn and wheat were able to bounce back off the lows of the day to close with small losses, while beans still ended down with double-digit losses.

Canola values showed small gains on the day, mainly due to the falling Canadian dollar.

The U.S. dollar index rose 1.03 cents today, while gold closed down $27.40 at $1,112.30.

The Canadian dollar fell 1.5 cents to close at US95.48 cents today.

The Dow Jones March contract closed down 113 points at 10,557 today.

In the energy sector, crude oil closed down $1.40 at US$77.62 a barrel.

Corn closed down 1.2-3.4 cents a bushel today; beans closed down 9.4-14.2 cents a bushel.

Wheat markets closed down 0.4-5.2 cents a bushel today; Minneapolis March futures closed down 2.6 cents a bushel.

Canola closed mixed, up 40 cents to down 60 cents per tonne today.

Western barley closed unchanged at $150 per tonne.

U.S. dollar performance

For some who may be wondering what the U.S. dollar index is, or how it measures the U.S. dollar, here’s a brief layman’s explanation.

The USD index measures the performance of the U.S. dollar against a basket of currencies that include: the Swedish krona (SEK), the Swiss franc (CHF), the Canadian dollar (CAD), the British pound (GBP), the Japanese yen (JPY) and the euro (EUR).

So, depending on the condition of the economy, monetary policies, interest rates, inflation or reports on jobless rates or other economic indicators that may come out from time to time, the U.S. dollar is measured and compared against those other currencies as a gauge to how the U.S. economy is doing compared to the economies of those other countries.

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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