Wednesday was another mostly negative day for our markets. Spot corn closed down 1 3/4, spot soybeans closed up 3 3/4, harvest winter wheat closed down 17 and harvest spring wheat closed down 16. In the overnight trade all of our markets are on the positive side. Oil closed down $18.54 yesterday at $94.41 per barrel. It is stronger this morning with it now trading at $99.41 per barrel. With some very choppy movements our dollar has traded between a low of $0.721 US and a high of $0.723 US over the last 24 hours. This morning it is currently valued right in the middle of the range at $0.722 US.
Our markets reacted mostly negative yesterday after the two week ceasefire started between Iran and the US. Crude oil prices pulled back big time and outside stock markets reacted positive to the announcement. We see crude prices increasing this morning with the markets possibly reacting like they think the ceasefire will not hold.
Wheat prices fell the hardest yesterday as the wet weather forecast for much of the US winter wheat growing regions helped to pull prices lower. The opening of the Strait of Hormuz also hurt prices as thoughts that fertilizer could be moving to Australia to be utilised with their wheat crop was also negative for wheat prices. It has been written that there are concerns that less wheat would get planted in Australia this coming year due to both high fertilizer costs and maybe more importantly the lack of supply. With fertilizer moving again at least in the short term both of these concerns are being alleviated.
Soybean oil prices pulled back hard yesterday with the drop in crude oil prices. These two markets are getting more strongly correlated as increased volumes of vegetable oils (especially soybean oil in the US) are utilized in biodiesel production. The best thing to say about the soybean market yesterday is that it closed roughly 20 cents off the low for the day.
With the current volatility staying in the market how should our farmers being reacting to this situation? Some are just sitting back and waiting, others are getting some crops sold. The reality is that we only know what the best reaction is much later as we look backwards on how commodity prices reacted. In the short term we are strong believers in being proactive with your marketing plan. Know your costs so that you can set prices at where you want to sell your production to be profitable. When you have this completed you can make some informed marketing decisions. This would include taking advantage of the price rally that the current war has brought to our markets. Setting realistic targets to reward the market if it does rally further is always a great step forward. We are large supporters of making smaller sales but selling more often when we have a volatile market like we currently have. It is hard to hit the highest price all the time and as such dollar cost averaging with increased sales is a solid option to remove some risk from your marketing plan.
Delores Seiter | 613-880-7458
Bob Orr | 613-720-1271
Tony Mitchell | 613-227-2525
Office | 613-489-0956
