Monday was another negative day for our markets. Harvest corn closed down 1, spot soybeans closed down 5, spot winter wheat closed down 8 1/2 and spot spring wheat closed down 7. In the overnight trade corn and the wheat sector are still negative with soybeans now on the positive side. Oil closed down $0.62 yesterday at $56.82 per barrel. It is weaker in trading again this morning with it now valued at $55.77 per barrel. Our dollar had a high yesterday morning of $0.727 US and a low around noon of $0.725 US. It has traded within that range since then with it currently valued this morning at $0.726 US.
With our commodity prices lower again yesterday analysts are struggling to come up with anything new on why prices are going lower. It really is coming back to supply side domination. World demand for our crops has never been higher but unfortunately increases in production have increased more than demand.
Soybean production in Brazil seems to come up with a new record high every year and this growing season is looking like much the same. With the current weather and the short term forecast continued favourable for crop growth in most of South America record production is getting more likely as each day progresses. Remember they will start combining soybeans in Brazil in the second half of January.
Corn production in Argentina is projected at a new record this year with Brazil also producing a large crop. This is coming off a new record large production in the US this year even if the USDA decreases their average yield in the January WASDE report. Although we have seen mixed reports out of Ukraine about their production levels we know they are going to move as much product to the export markets as they logistically can.
Of course wheat has been in the news lately with increased production all around the globe. This coincides with Russia decreasing their export price to insure that their wheat remains extremely competitive in the world market.
To summarise the supply side looks like doom and gloom is ahead for our markets. It is hard not to get caught up in these thoughts and wonder how low prices can go. Tomorrow we will take a better look at the demand side of the equation and bring up some reasons on why prices should not tumble to whatever a bottom could be.
Delores Seiter | 613-880-7458
Bob Orr | 613-720-1271
Tony Mitchell | 613-227-2525
Office | 613-489-0956
