| | US crops | Canadian crops | Livestock comments
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US Crops
There were large losses in the grain futures markets again this week. Negative fundamental news is limited. There were reported cancellations of soyoil purchases by China. Palm oil production has been increasing. There are reports of better than expected yields in the South American crops. However, there are also reports of several countries imposing export tariffs and lowering import tariffs in an effort to control food price inflation. That kind of news was bullish just a couple of weeks ago. A more plausible "reason" for the crash in grain prices seems to be that funds, who were to a great extent behind the strong rally in grain prices, are now selling out of their "buy" positions. Some of this selling relates to ongoing concern over the US economic situation. As futures prices drop quickly, the selling becomes frantic as participants try to get out to preserve profits or limit losses. Several days of limit down losses have resulted. Nobody knows where the bottom is, just like nobody knew when the rally would stop. Although technical analysis seems to have little, if any, consideration in the current market, prices on many charts are at or close to chart support zones. Many indicators are showing the market as oversold. There are important reports (2008 seeding intentions & grain inventory) due from USDA on the morning of March 31, and the grain markets will likely stabilize before that date. It is hard to believe, that with grain market fundamentals still tight, that there will not be a recovery in these markets before the end of June. Market sentiment, which was bullish, is damaged, and it may take some time to regain that attitude.
Here are some of the futures price changes over the week:
May soybeans down $1.53/bushel to close at $12.07/bushel
November soybeans down $1.39 to close at $11.40/bushel
May soybean oil down 6.16 cents to close at 54.40 cents/pound
May corn down 52 cents to close at $5.07/bushel
December corn down 54 cents to close at $5.21/bushel
May Minn. wheat down $1.73 to close at $12.77/bushel
Dec. Minn. wheat down $1.85 to close at $10.24/bushel
Dec. KC wheat down $1.74 to close at $10.35/bushel
Canadian Crops
Canola futures crashed again this week after the daily trading limit was increased last week to $45/tonne. May canola futures fell to $577/tonne, a loss of $62/tonne. November canola futures fell to $586/tonne, a loss of $61. World vegetable oil prices have been dropping, with US soyoil down the 200-point limit several times this week. Canola has fallen faster than soybean oil because of their respective limit moves, resulting in an improvement in the crush margins for Canadian crushers. New export business has been lacking, as buyers stand aside to watch the market drop. For those producers still holding old crop inventory and wishing to gamble on a futures price recovery, some of the basis contract levels have been "not too bad".
May barley futures lost about $12/tonne, as corn prices fell. Cash market prices have not changed much, but could do so if imported corn becomes more expensive. On that note, the Canadian dollar almost four cents this week against the US dollar, which should be supportive to our Canadian prices. The CWB offered another contract for Pool B feed barley on Wednesday, but it was fully committed to in a couple of hours. There may be more of those DDCs coming. Cash feed wheat prices remain strong, but if US wheat and corn prices continue their slide, feed wheat prices may ease. Edible pea bids are slipping, and most forward bids are discounted past March delivery...not a good sign.
Livestock Comments
Limited US cash cattle trade took place, and that limited trade was both higher and lower than last week's $89 to $90 range. US cattle futures were volatile this week, but held together much better than the grain markets, with the nearby April little changed. Next April 2009 live cattle futures lost $2.40/cwt over the week. Beef cutout values were lower. Abundant meat supplies in the US continue to hamper any sustained price recovery.
Alberta fed cattle prices were $1.50/cwt higher, and traded in a range of $82.50 to $85.70/cwt. Alberta average feeder cattle prices were steady to $3/cwt lower last week. If feedgrain markets continue to drop, that could support feeder cattle prices. However, if feed grain prices recover, expect feeder cattle prices to slip a bit more. Producers have responded to the recent improvement in slaughter cow prices with increased sales. Cow prices were quoted $2.50/cwt lower this week on average, but demand for slaughter cows remains good.
April US hog futures made new lows this week. Cash hog prices were almost $2/cwt lower. US pork exports are very strong, and that is cushioning the price impact of continued large hog slaughter numbers. Alberta's weekly average base hog price was $0.097/kilogram, down from $1.02/kg last week, despite the weaker Canadian dollar.
Happy Easter Everyone! |
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