Tuesday was another negative day for our markets. Harvest corn closed down 3 3/4, spot soybeans closed down 8 1/2, spot winter wheat closed down 11 3/4 and spot spring wheat closed down 3 1/2. In the overnight trade corn and spring wheat are mixed with soybeans and winter wheat still negative. Oil closed down $1.55 yesterday at $55.27 per barrel. It is stronger in trading this morning with it now valued at $56.46 per barrel. Our dollar had a high yesterday morning of $0.728 US and has since then trended lower. This morning it is currently valued at $0.725 US.
Soybeans led the way lower again yesterday as they fell below a technical support level. The uncertainty over the soybean trade with China has fallen over this market with it not responding to any of the spot sales that are announced. There is also much uncertainty as to what level these sales are at. Remember the target set by the Trump administration was 12 million tonnes and current talk is that sales might be as high as 7 million tonnes with others saying it is only at 4 million tonnes. In this case uncertainty is leading to decreased prices.
We talked yesterday about negativity in the market place. Today let’s talk about some potential positives for prices.
For the corn market record export demand in the US is the bringing the most support. Their corn sales and shipments are up over 60% this marketing year compared to last year. We should note that the USDA was only projecting an increase in exports of about 17% for this year. The other main support for the corn market is the continued strong grind for the ethanol market in the US. It is looking like they will utilise more corn this year then any other year on record for the ethanol industry in the US.
The largest support for the soybean market is coming from the domestic soybean crush in the US. The USDA initially projected the soybean crush to increase by 4% this year up to 2.555 billion bushels. However, based on the current increase in the soybean crush for this marketing year they will utilise 11.8% more soybeans then last year. This would be an increase of about 288 million bushels. Over the marketing year they will crush just over 60% of the US soybean production. It was just a few years ago that the US exported around 60% of their production.
In the wheat market I really cannot find any big positives for price support going forward. Sorry about that!
For our farmers probably the biggest support is the value of our dollar compared to its US counterpart. If our dollar was to increase from its current level to say $0.90 US corn prices for next fall would fall from $236 to $191 per tonne. The Canadian Farmer is living off the difference in the exchange rate. We all know that with the depressed prices on the world market we cannot afford to see a much stronger Canadian Dollar.
If anyone would like to discuss any of the above points give me a call anytime. Hopefully going forward these optimistic points will override the pessimistic points I brought up yesterday.
Delores Seiter | 613-880-7458
Bob Orr | 613-720-1271
Tony Mitchell | 613-227-2525
Office | 613-489-0956
