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April 7 — Financial markets are slowly giving back the gains from last week. The lack of any news to help build on last week’s rally of optimism, and a short trading week with Easter weekend approaching, has set a bullish tone to the markets that will probably carry through into next week before there is an opportunity for a correction.
The Dow Jones closed down 128 points for the day. The U.S. dollar finished up half a cent again today; the Canadian dollar is up 0.19 cents to close at US80.83 cents.
Crude oil finished down $1.90, closing at US$49.15 per barrel.
Corn finished up eight to 10 cents a bushel, beans are down three to six cents a bushel and wheat is down seven cents a bushel.
Canola is down $2-$4 per tonne and barley finished down $14.40 per tonne, closing at $125.60.
Losses in the financial markets, along with crude futures falling and the U.S. dollar rising, pushed all grains into double-digit losses today.
Reports of frost Monday evening in some of the southern Plains winter wheat crop should have been supportive to wheat futures, but with the overall negative tone in the markets, wheat was drug down with the rest of the grains. There is a lot of speculation as to the amount of damage, if any, that the frost may have caused and that will not be real evident for at least a couple of weeks or longer, so traders didn’t see this as enough to override the downward trend in the grains today.
Barley markets are down hard as spring weather hits the Prairies and feed usage demands are expected to slow down.
Hopefully the feeding frenzy will slow down and markets will hold steady for the next couple of days heading into the long weekend.
Reuters on Tuesday quoted the Financial Times of London as saying global food production needs to double by 2050 to avert the risk of scarcity and high prices hurting international stability, citing a policy document for a G8 meeting on agriculture.
“Without immediate interventions in agriculture and agri- marketing systems, the 2007 crisis will become structural in only a few decades,” the Financial Times quoted the document as saying.
It said the document was drafted by the G8’s Italian presidency ahead of a meeting in Treviso, set for April 18-20. The G8 will include leaders from the U.S., Canada, Japan, Germany, United Kingdom, France, Italy and Russia.
The document is quoted as saying a further food crisis will have “serious consequences not merely on business relations but equally on social and international relations, which in turn will impact directly on the security and stability of world politics.”
Reuters said the upcoming meeting was prompted by last year’s price surges, which triggered riots and social unrest across a number of countries.
That’s all for today. — Brian
— Brian Wittal has spent over 27 years in the grain industry, including as an elevator manager and producer services representative for Alberta Wheat Pool, a regional sales manager for AgPro Grain and farm business representative for the Canadian Wheat Board, where he helped design some of the new pricing programs. He also operates his own company providing marketing and risk management advice for Prairie grain producers. Brian’s daily commentaries focus on how domestic and world market conditions affect you directly as grain producers.