Tuesday was a mostly positive day for our markets. Spot corn closed up 3/4, spot soybeans closed up 6 1/2, harvest winter wheat closed down 2 and harvest spring wheat closed up 3 1/4. In the overnight trade corn is mixed, soybeans are positive and the wheat sector is negative. Oil closed $3.16 yesterday at $74.56 per barrel. It is stronger in trading again this morning with it now valued at $74.68 per barrel. Our dollar had a low yesterday morning before noon of $0.727 US and then trended higher going up to $0.733 US in the overnight trade. It has eased back just a bit this morning with it currently valued at $0.732 US.
How did our markets react yesterday to the conflict in the Middle East? Crude oil of course jumped up and remains very volatile. President Trump has come out and said that the US military could escort oil shipments through the Strait of Hormuz or will provide extra oil tanker insurance for this journey. Whether that will bring some stability to crude oil prices is yet to be seen. As Iran is a major exporter of nitrogen fertilizer prices for this has spiked with it being reported that many large wholesalers and retailers in the US have currently pulled their offers. How this conflict affects the price of nitrogen fertilizer going into the spring planting season will be closely watched.
The current soybean harvest in Brazil is at about 40% complete. This is a bit behind last year’s pace but is not really a concern at this time. Prices in Brazil are currently up to $1.40 US per bushel (over $51 per tonne) less expensive than soybeans from the US. Any increased purchases from China at this time will of course be a political decision and not an economic decision. Soybean oil prices are being supported by the higher price of crude oil and with this the soybean market traded in a very wide 23 cent range yesterday.
Talking about China it was announced yesterday that high level trade diplomats of both China and the US would be meeting in mid-March. They are expected to set the ground work for the meeting between the two Presidents in early April. There still is some concern that the military action taken against Iran will lessen the probability of any new trade deal between the US and China. Remember China was the largest purchaser of crude oil from Iran and has come out and strongly criticized the current bombings.
New crop corn prices on the CBOT are currently at their highest since last June. The strong export sales of corn out of the US definitely continues to provide support to this market. Reduced planted acres this year in the US should also help to decrease supply going forward. As we noted above the current higher prices of nitrogen fertilizer has raised the talk that more acres may switch from corn to soybeans in the US. This is something that could become a game changer for prices.
Delores Seiter | 613-880-7458
Bob Orr | 613-720-1271
Tony Mitchell | 613-227-2525
Office | 613-489-0956
