Tuesday was a mostly negative day for our markets. Spot corn closed down 5, spot soybeans closed down 8 1/2, harvest winter wheat closed up 1 3/4 and harvest spring wheat closed down 3 1/2. In the overnight trade all of our markets are on the negative side. Oil closed up $0.54 yesterday at $112.95 per barrel. It is much lower this morning with it now trading at $95.19 per barrel. Our dollar started out at $0.718 US yesterday morning and then trended higher going up to $0.723 US in the overnight trade. It has eased back a bit since then with it currently valued this morning at $0.721 US.
It was announced last week that a two week ceasefire has been agreed to between the US and Iran. During this time the Strait of Hormuz is supposed to be open for shipping. With this development crude oil prices have pulled back hard.
Yesterday our markets were more in a wait and see mode about what was going to occur with the war in the Middle East as compared to other factors. All of markets did take some time trading on the positive side yesterday before they all pulled back as the trading day progressed.
As we talked about in yesterday’s report wheat prices did not rally even with the very poor good to excellent ratings reported. We should also note that the rating of only 35% good to excellent for the winter wheat crop in the US was about 5% lower then what the average trade estimate was prior to the report. With a weather forecast calling for rain for the majority of the US winter wheat crop prices struggled to rally again. It is very interesting to see wheat prices the weakest this morning.
Nearby soybean prices have traded within a 25 cent range over the last 15 days. With managed money holding a near record long position (looking for prices to go up) this market could be ready for a break out either way. If the ceasefire reached results in the current war ending this will be negative for crude oil and as a result negative for the biodiesel market which soybean oil is a major component of in the US. Under this scenario managed money would liquidate much of their long position and soybean prices would fall fast and hard. Not a good outlook for prices what so ever. For prices to rally it looks like China would have to step up with increased old crop soybean purchases from the US. At this time this scenario does not seem very likely.
Delores Seiter | 613-880-7458
Bob Orr | 613-720-1271
Tony Mitchell | 613-227-2525
Office | 613-489-0956
