Grains Matter Chatter – Episode 229
Thursday was a mostly negative day for our markets. Harvest corn closed down 4 3/4, spot soybeans closed up 1/4, spot winter wheat closed down 4 3/4 and spot spring wheat closed down 4 1/2. In the overnight trade corn and soybeans are negative with the wheat sector just on the positive side. Oil closed down $0.27 yesterday at $70.02 per barrel. It is stronger in trading this morning with it now valued at $70.70 per barrel. Our dollar started out yesterday morning at $0.707 US and then trended lower going down to $0.702 US in the overnight trading. It has bounced back up just a bit this morning with it currently valued at $0.703 US.
A couple of weeks ago the hot item was soybean oil. World vegetable oil stocks were in high demand with palm oil unable to meet some of the demand. This resulted in soybean oil being in higher demand which resulted in some higher prices and a higher soybean crush rate in the US. One result of the higher crush is that there is an oversupply of soybean meal which has brought soybean meal prices lower. We should also note that speculative funds have built a large short position (betting on prices going lower) in this market. The end result for soybeans is that they have been unable to rally in price and continue to face downward price pressure especially with the large crop growing in South America.
Although US corn exports were increased substantially in the USDA report this week they have some stiff competition on the world market. FOB prices in Argentina are now very comparable and basis levels in Brazil are under pressure with their farmers recently being sellers as interest rate costs have increased for them. Exports from the Ukraine are flowing well as they remain a low cost provider to other countries. Let’s not forget exports out of Ontario and Quebec that compete with both US exports into parts of Europe. With all of this competition it may be hard for US exports to continue their strong early marketing year export pace.
It was interesting to see how our dollar did not negatively react on Tuesday when the Bank of Canada announced the 50 basis point decline in their benchmark lending rate. It seems that the marketplace waited one day to lower the value of our dollar. There are different opinions out there on how much lower our dollar will go based on the current interest rate spread between the Bank of Canada and the US Federal Reserve and what the bottom will be is yet to be seen. The trend however does remain down.
Friday’s thought: Friday the 13th is still better then Monday the whatever! Have a great weekend.
If you would like to talk about the markets or price some of your crop for the future or in store, please reach out to us via phone or email to info@northgowergrains.com. Prices quoted herein are for product at our elevator.
Delores Seiter | 613-880-7458
Bob Orr | 613-720-1271
Office | 613-489-0956
