July 28 –– North American equity markets started off slow. and when a U.S. report came out that showed consumer confidence declining month over month. the equities soon fell into negative territory, as no one was in the mood for taking on further risk.
The Canadian dollar continued its climb this morning, up about a quarter of a cent, but then as equities and crude oil fell off, so did the dollar, to end down 0.19 cents to close at US92.35 cents.
The Dow Jones September quote closed down 20 points at 9,050.
Crude oil closed down $1.15 at US$67.23 per barrel.
Corn closed up five to 6.4 cents per bushel today; deans ended up 10-34 cents per bushel today.
Wheat closed mixed, up three to down four cents per bushel on the various U.S. exchanges. Minneapolis September wheat futures closed up three cents per bushel today.
Canola closed up $1.40-$3.20 per tonne today.
Barley closed down $2.70, at $144.50 per tonne.
Beans found good support today with talk that China may be buying a couple more cargos of old crop, as its reserves may not be as big as expected and they are trying to secure supplies. The strong rally in beans and the drop in the dollar allowed canola to finish with small gains for the day.
The volatile Canadian dollar impacts your farming operation in many ways and you need to be able to manage it better from a risk and profitability perspective.
A rising dollar certainly impacts the net return you will get for your grains, which are primarily traded onto the world market in U.S. dollars.
As the Canadian dollar rises, the price for our grains is forced down in order to remain competitive on the world markets. Using a simple hedge strategy to protect yourself from a rising dollar can mean more money in your pocket at the end of the day. Conversely, a high Canadian dollar can be good for buying equipment or inputs such as fuel or fertilizer that are manufactured abroad, so if the dollar is high and you want to protect that for purchases you plan to make down the road, you could short the dollar and protect that value for making those purchases at a later date.
Please talk to a broker if you have questions or wish to set up a brokerage account to get all the details, as that is the first step to using futures or options as part of your risk management strategy.
Take the time to talk to a broker and understand all of the risks associated with trading.
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.
Brian welcomes feedback and information on market conditions in your area, such as current offering prices, basis levels, trucking premiums and special crops contracts. Contact Brian today.