Nearby canola contracts started the week at $471.30 per tonne and traded on either side of unchanged for consecutive trading sessions during the week. On May 14, the July contract closed at $470.70 per tonne.

July soyoil dropped by about half of a cent in the middle of the week, but managed to regain some of those losses by the end of the week. Strong export data has given soybean prices a reason to rally. The U.S. Department of Agriculture (USDA) has projected soybean exports to China to total 3.527 billion bushels. If this projection comes true, it would set the record for the largest amount of soybeans imported in a single marketing year.

Global crude oil prices were near five-week highs earlier in the week, following hopes of demand levels bouncing back to pre-pandemic levels as countries around the world ease restrictions.

Western Canadian Select futures have rallied after hitting around US$5 per barrel in mid-April. As of May 15, the June contract for WCS was $24.38 per barrel. However, that’s still about 50 per cent lower than the same time last year. Norges Bank Investment Management, a branch of Norway’s central bank, has blacklisted several Canadian oil firms due to greenhouse gas emission levels. That’s another blow to Canada’s crude oil industry, which was already suffering due to lack of demand.

Planting activity has given canola prices a bit of a lift, as producers focus on seeding instead of farm deliveries.

As of May 11, seeding in Saskatchewan is 18 per cent completed. The southwest part of the province was furthest along, at 39 per cent seeded. Alberta’s spring planting is almost 21 per cent complete as of May 12, with canola just over nine per cent seeded. In Manitoba, seeding is nine per cent complete, with canola seeding ranging from just beginning to 15 per cent complete.

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The agricultural sector from the United States to Russia, and Brazil to Europe, is seeing profits harmed by the rise in diesel prices. The global oil benchmark, Brent crude, touched US$80 a barrel for the first time since late 2014 in mid-May.

Coupled with local economic issues, the increase is making it even harder for many farmers worldwide to turn a profit in the estimated US$2.4-trillion agriculture industry, casting a cloud over future investments.

In the United States, fuel accounts for about five per cent of farmers’ overall costs, and is hurting margins at a time when farm income is already half that of 2013. Massive harvests have depressed prices of staples such as corn, wheat and soybeans.

Diesel fuel is essential for planting, harvesting, and shipping crops to market. In the United States, farmers will spend an estimated US$15.25 billion on fuel and oil in 2018, an eight per cent increase from 2017, U.S. Department of Agriculture data showed.

The price of ultra-low-sulphur diesel used for farming equipment and transporting crops has not been this high in May since 2014. Heating oil futures, the proxy for ultra-low-sulphur diesel, traded at US$2.29 a gallon recently.

Ron Heck, who grows soybeans in Perry, Iowa, said his fuel costs could go up US$1,000 to US$2,000 during the Northern Hemisphere’s spring.

“You feel the pain right away,” Heck said.

In Russia, fuel prices for farmers are up 50 per cent compared with a year ago, Arkady Zlochevsky, the head of Russia’s Grain Union, a non-governmental farm lobby, told Reuters. Farmers will need to spend more ahead of harvesting, which starts in about a month in Russia, he said.

Financial stress

U.S. farms are also factoring in potential losses of income due to a 25 per cent tax China announced on major American imports following the U.S. government’s decision to slap duties on steel and aluminum.

“We’re seeing financial stress occurring in agriculture that we probably haven’t seen for a decade or so,” said Scott Brown, director of strategic partnerships at the University of Missouri’s College of Agriculture, Food and Natural Resources. “If diesel prices continue to go higher, it continues to put more pressure on.”

Net farm income is forecast to fall to US$59.5 billion in 2018, an 8.3 per cent decline from 2017, according to the USDA. It has fallen by 55 per cent since 2013.

In Holly Grove, Arkansas, Tim Gannon paid about US$17,000 in February to fill a 7,500-gallon tank with diesel used to run equipment and irrigation. The price increase means it may cost up to 25 per cent more, or an extra US$4,000, to refill it in coming weeks, he said.

“That’s a fairly significant amount of income to lose,” he said. Gannon has been taking steps to cut his diesel costs over the past year by reducing the number of times he tills.

In Brazil, farmers are also taking steps to deal with higher costs, as diesel prices have climbed 43 per cent in the country since July 2017. Eder Ferreira Bueno, a farmer in grain state Mato Grosso, said increased fuel costs meant he had “no other option but to spend less to treat the soil.” Other farmers might hire fewer workers or delay investment plans, he added.

In neighbouring Argentina, the top shipper of soybean meal and oil worldwide, farmers are having to deal with a weakening currency at the same time fuel costs are rising.

“Where the impact is felt greatest is in trucking costs. We are already at a disadvantage when compared to our competitors on freight costs within Argentina,” said David Hughes, a farmer in Buenos Aires province and president of Argentine wheat industry chamber Argentrigo.

In Europe, French grain producers say rising oil costs may have a knock-on effect on fertilizers and crop protection products.

“It comes at a time when things are already difficult for farmers economically,” said Philippe Pinta, head of grain growers’ group AGPB in Paris.

Wamego, Kansas, farmer Glenn Brunkow said he may lock in diesel prices in advance for the first time ever next year, to avoid the pain of future increases.

“You just kind of all of a sudden realize, ‘Wow, it’s pretty high,’” he said.

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In July 2014, a two-month reversal materialized in the accompanying long-term chart indicating the crude oil market was about to turn down from $106 per barrel. Once prices fell below an important line of support in the $96-per-barrel area (shown as A), sell stops were triggered, causing prices to plummet to a long-term line of support in the $46-per-barrel area (shown as B).

Then, after having a “dead cat bounce” (minor bounce) to $62 per barrel, the market resumed the downtrend, dropped below the major long-term line of support (B), and collapsed to $26.16 per barrel on January 20, 2016 before encountering another reaction.

Support

Support is a term used to describe a price level where the buying of futures contracts is expected to noticeably increase and at least temporarily halt the current direction of the market.

On bar charts, these areas will appear as well-defined price ranges within which the market previously traded essentially sideways or higher prior to making a decisive move down. The greater the amount of time the line of support persists, the greater will be the potential for support or resistance in the future.

To illustrate; crude oil prices were supported by line (A) for five years. Once prices fell below $96, thus breaking the line of support, then $96 became resistance on the following upward reaction.

Another characteristic which helps to gauge the relative support of a price area is the vertical distance the market must fall prior to reaching the area in question. The greater the market decline, prior to reaching a support level, the greater should be the support at that area.

To exemplify this characteristic; after the crude oil market broke down below support at $96 per barrel, the market plummeted $60 before bouncing off a major line of support (B), which had persisted for 16 years.

Lines of support, once identified, prove to be reliable indicators of future price direction.

Market psychology

Support areas evolve because the market attracts buying around the bottom of a range. If prices break down through the line of support, shown as (A) in the accompanying chart, then all recent buyers are holding losing positions. Any return move back to this area subsequently represents an area in which to liquidate a long position at break-even or with a reduced loss. Therefore, the area where contracts are offered for sale increases and becomes resistance. Also, those who sold at higher levels, now have profits and may use the bounce to add to their short position.

The concept of support and resistance and the market’s reaction when it moves into a support or resistance area are among the most interesting facets of chart study. Where a classic formation may not appear on a chart for several months, one can be reasonably sure that there is always a support or resistance area, even if minor, not very far from the market. This is important because it can help one formulate expectations of future price action.

Support or resistance areas are commonplace on futures charts, but are extremely important as they illustrate where future rallies and declines are likely to fail. Support and resistance levels define the parameters of the major trend.

It is important for producers to recognize the trend in the crude oil market and to understand its significant influence on the Canadian dollar and subsequent impact on agriculture. Producers who, 18 months ago, recognized the impending downturn in the crude oil market, were able to position themselves for the anticipated decline of not only crude oil, but the Canadian dollar as well.

Send your questions or comments about this article and chart to info@agchieve.ca.

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The loonie should stick in the 96- to 99-cent range (US) over the next two to four weeks, said Osborne.

Europe and its ongoing debt concerns will continue to be the big driver, Osborne said. Traders are anxious to see if Greece can reach a compromise with private creditors, while hoping the European Central Bank can boost the euro-zone monetary system, he said. Progress on those two fronts would add some positive sentiment towards the Canadian currency, he said, while a Greek default would have a negative effect.

Europe’s debt woes are in contrast to positive economic data from the U.S. over the past month, which has some experts thinking the world’s biggest economy could be on the verge of recovery. The upward trend in jobs and manufacturing data in the U.S. has provided some additional support towards the Canadian dollar, said Osborne, adding he expects the American economy to soften slightly early in the year, similar to what it did in early 2011.

Upward trends in commodities, including crude oil prices, would also support the Canadian dollar, he said. However, once crude oil prices go above US$100 a barrel, there is less of a correlation between crude oil and the Canadian dollar, he said.

Osborne said there is nothing currently in the short term that is going to move the Canadian dollar towards parity, he said.

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co-operator contributor / ottawa

Using crops to produce ethanol hasn t raised food prices and it positions Canada for a strong bioeconomy, according to a new report from the Conference Board of Canada.

What s more, next-generation technologies, flex-fuel vehicles, and supporting policies could extend the role ethanol plays in Canadian transportation and manufacturing, adds the report, which is based on an extensive review of studies on alternate fuels.

Canada currently produces about two billion litres a year, and that figure will increase because of federal fuel mandates, the report notes.

Renewable fuels can help reduce dependency on fossil fuels and improve energy self-sufficiency, it states. They also contribute to reducing greenhouse gas (GHG) emissions when compared with gasoline, and reduce environmental pressures related to producing and transporting fuel to end-consumers.

Stage set

Ethanol production has set the stage for the development of biorefineries and a bioeconomy, the report states.

Today s biorefinery has transformed the way ethanol is produced, with additional potential gains on the horizon. The cost of government support programs has largely been offset through value-added agricultural crops and job-creation programs.

The report was welcomed by Ron Bonnett, president of the Canadian Federation of Agriculture.

Ethanol is the leading edge and it needed government investment to get the private sector to become involved, he said.

Producing crops for ethanol has been an economic boon for farmers and Bonnett said he is keen to see commercialization of more bioproducts.

All this makes for a more viable agriculture in both developed and developing countries, he said. It also helps farmers apply new technologies to their farms.

This leads to an increase in productivity, and that is the best way to increase the food supply, said Bonnett.

This is where the discussion on ethanol gets lost in the food-versus- fuel debate, he said.

The conference board report looks just at ethanol, although biodiesel blends are most common in the transport industry.

It sought out studies on greenhouse gas emissions, and found GHC reductions ranged from 40 per cent to 62 per cent compared to gasoline.

As cropping practices and yields continue to improve, and as ethanol plants rely more on renewable energy (primarily agricultural wastes), GHG emissions per litre of ethanol will continue to decline, the report states. The shift to newer technologies as they become commercially viable will also contribute to reducing GHG emissions intensity.

Unsubstantiated

Meanwhile, charges that biofuels are driving up food prices aren t substantiated, the study concluded.

It is important to distinguish the impact of rising fuel costs on agricultural prices from that of biofuels demand, as rising oil prices have much stronger impacts. Even with rising demand in both Canada and the U.S. over the past decade, the total (corn acreage) area harvested has not increased.

The major reason for this is the increase in corn yields, which produces a much larger crop from the same acreage. Although ethanol producers cite higher corn prices as benefit to local farmers, biofuels demand for corn has not significantly impacted land use in North America.

The Organization for Economic Co-operation and Development has conducted one of the few studies that actually tried to measure the impact of crude oil prices versus biofuel demand on food prices.

It found that oil prices have a much stronger effect, the report stated. The studies of agricultural prices dealing with the 2006 08 period that do not separate the impacts of biofuels demand from oil prices must therefore be viewed with caution.

Biorefineries could become major players in the economy of the future, it adds.

Many products and chemicals manufactured today from non-renewable resources can be created from renewable feedstocks such as energy crops, biomass, and waste. Today, ethanol plants are integrating green-power generation and producing biochemical building blocks as co-products, replacing those from petroleum.

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A two-week reversal indicates a change in direction and can occur at the top or bottom of a market. This two-week reversal signalled an end to the rally.

The two-week reversal identifies a shift in market perception. At first, the longs are content with their positions, as the market settles higher and adds reassurance of greater profits.

However, the following week’s activity proves to be discouraging to the traders who are still long the market. It’s a complete turnaround from the preceding week, as prices turn down and cast doubt on the expectation for higher prices. The longs respond to weakening prices by exiting the market. Some sell to take profit and others sell to cut their losses.

Despite crude oil’s $25-per-barrel drop in price, the major trend is still up as defined by the uptrending channel in the accompanying chart.

CHANNELS

In a rising market, a trendline is drawn across at least three points of price contact, each of which coincides with the low of a market reaction. These price reactions must bottom at progressively higher levels.

In an uptrend, the uptrend line is the channel’s lower boundary. The upper boundary, the return line, is parallel and drawn across the highs of each progressively higher advance. The return line points out the areas where reactions to the trend are likely to begin. The uptrend line is constructed first.

The corridor, within which prices will fluctuate as the trend proceeds, is called the trend channel. The price action doesn’t always make it possible to construct a well-defined and compact channel, but when it does, it is extremely helpful for studying the trend.

MARKET PSYCHOLOGY

Price activity that lends itself to trendline and channel construction reflects a particular sequence of behaviour. As a new uptrend begins to emerge, buy orders materialize, but many are at a limit price under the market. In the normal ebb and flow of the market some of this buying is satisfied on price declines. However, a portion of the demand is not satisfied and when prices again begin to move up, some of these buyers jump in for fear of missing the move. The balance of unfilled buying will continue to trail the market in hopes of catching a price reaction. Most of these buyers will gradually increase their bids as the market advances.

Some profit taking and short selling will emerge as the market rallies to new highs. This results in an increase of potential buyers as well as that of shorts eager to take profits during periods of price retrenchment, preventing remaining buy orders that are too far under the market from being satisfied.

In an uptrend, the market rallies and then reacts to uncover underlying support. This process, once set in motion, develops a momentum which strengthens the trend and makes it persist. After a period of upward movement, one must be on the alert for any subtle changes in this repetitive process as they will show up clearly on the price charts.

The crude oil market is beginning to turn up from the lower boundary of the uptrending channel. Just as a two-week reversal indicated prices would turn down three months ago, another two-week reversal, that indicates prices are about to turn back up, could materialize on July 1, 2011, if prices have a weekly close above $91.97.

The main trend is up as long as prices remain confined within the uptrending channel. However, a decisive close under $89 a barrel could spark a long liquidation break.

Send your questions or comments about this article and chart to info@ag-chieve.ca.

David Drozd is president and senior market analyst for

Winnipeg-based Ag-Chieve Corporation. The opinions

expressed are those of the writer and are solely intended

to assist readers with a better understanding of technical

analysis. Visit Ag-Chieve online at www.ag-chieve.ca

for information about grain-marketing advisory services, or

call us toll free at 1-888-274- 3138 for a free consultation.

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Rising food prices are a growing global concern, partly fuelling the protests which toppled the rulers of Tunisia and Egypt in January and February, which in turn unleashed unrest in North Africa and the Middle East from Algeria to Yemen.

The UN Food and Agriculture Organization’s Food Price Index hit its second straight record last month, driven by rising grain costs and tighter supply to further pass peaks seen in 2008 when prices sparked riots in several countries.

RECORD HIGHS

FAO economist Abdolreza Abbassian said global food prices are likely to remain close to record highs until the condition of new crops is known, adding that jumps in the oil price could have a bigger impact on grain markets, which have seen benchmark U.S. wheat prices surge 60 per cent in the year to March.

“Until we know about new crops, that means waiting at least until April, our view is don’t expect any major corrections in these high prices, expect even more volatility now that oil has joined the crowd,” Abbassian said in a telephone interview.

Oil prices recently hit 2-1/2-year highs, nearing records set in 2008, with markets spooked on concern that North African and Middle East unrest would choke key supplies.

Farmers depend on fuel to run agricultural machinery, while dry-bulk shippers are heavy oil users, costs which are passed on to food buyers.

Spiralling shipping costs for commodities threaten to drive food inflation even higher as nations from Asia to the Middle East and Africa scramble for supplies, analysts say.

Stockpiling by some major grain importers “beyond countries’ normal needs” seeking to head off political unrest and secure supplies on domestic markets, has been adding uncertainty and volatility to the markets, Abbassian said.

“Political instability in the regions and countries affects the markets by adding uncertainty: will a country buy or not buy, why it had bought so much now… those things are disruptive to the normal trade,” he said.

BIOFUELS

Corn and soybeans usually tend to follow crude oil prices closely as they are used as a commodity to produce biofuels, with demand from that sector fuelling the 2008 spike.

Abbassian said rising oil prices can help biofuels regain soon a major role they played in driving food prices in 2008.

Bigger grain stocks now than in 2007- 08 are serving as a buffer to prevent the rerun of the food crisis, but the FAO has been concerned about the heavy use of stocks, Abbassian said.

The FAO statement said it expected a tightening of the global cereal supply-and- demand balance in 2010-11.

“In the face of growing demand and a decline in world cereal production in 2010, global cereal stocks this year are expected to fall sharply because of a decline in inventories of wheat and coarse grains,” the agency said.

FAO said it forecasts global wheat production to increase by around three per cent in 2011.

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But those plans are now on hold, as Marquis and other ethanol producers brace for the possible end of $6 billion a year in U.S. subsidies for the alternative energy source.

“In certain scenarios, it could be very devastating,” said Marquis, whose Marquis Energy operates a 110-million- gallon ethanol plant in Hennepin, Illinois. “It is difficult to know what will happen.”

The 45-cent-a-gallon tax credit for fuel blenders and 54-cent-a-gallon tariff on imports that subsidize the U.S. ethanol industry are due to expire on Dec. 31. With Washington focused on deficit reduction, many in the industry call renewal an uphill battle.

U.S. ethanol plant owners, corn farmers, investors and bankers are scrambling to calculate what removal of subsidies will mean for ethanol production and the price of corn. More than a third of U.S. corn is used to make the biofuel.

Many analysts and industry players say the most immediate impact would be a 10 to 15 per cent drop in production in 2011.

Margins would come under pressure, causing some producers to suffer, and discretionary blending of ethanol with gasoline would likely slide.

Corn prices are also seen impacted. Most analysts polled by Reuters expected U.S. corn futures to drop 10 to 20 cents per bushel if Congress does not extend subsidies. But analysts said corn prices should rebound due to supportive fundamentals and investments by funds.

The ethanol industry would feel only a modest impact if the incentives lapse, said Bruce Babcock, agricultural economist at Iowa State University, citing high crude oil prices and a U.S. law guaranteeing biofuels a share of the market.

“Production will not fall that far,” Babcock said.

Ethanol output would be five per cent, or 600 million gallons, lower without the subsidies than with them, Babcock estimated in a November report, which also estimated that ethanol prices would be six per cent lower and corn prices seven per cent lower.

MOVING TARGET

The profitability of ethanol production is a constantly moving target, as the fluctuating prices of corn, crude oil, corn co-products and natural gas factor in to margins. “There are a lot of moving parts,” said Tom Waterman, industry analyst and publisher ofThe Ethanol Monitor,which tracks industry profitability.

One key calculation is the price of gasoline relative to ethanol prices, which becomes more critical without government support.

Another key to profit margins is the price of the feedstock. Corn is the largest expense for U.S. ethanol makers.

The benchmark corn futures contract on the Chicago Board of Trade hit $6.05 in early November, its highest in 26 months and more than 50 per cent above a year ago.

The Renewable Fuels Association, a trade group, said if the tax incentive expires, two out of every five ethanol plants could close, and more than 100,000 workers could lose jobs.

“It will be a blow to the industry,” said Jeff Broin, CEO of POET, the world’s largest ethanol producer with 27 U.S. biorefineries. The other major producers are Archer Daniels Midland Co. and Valero Energy Corp., each with more than one billion gallons of capacity.

Broin, other ethanol leaders and farm-state lawmakers are pressing for Congress to vote this month to extend the subsidies. The industry says it will accept lower support rates and other reforms if there is a short-term extension of incentives. Their best chance is for ethanol to piggyback on a must-pass tax bill.

“A lapse in the ethanol tax incentive is a gas tax increase of over five cents a gallon at the pump,” said Sen. Chuck Grassley, an Iowa Republican in a Senate speech Dec. 2. “I just don’t see the logic in arguing for a gas tax increase when we have so many Americans unemployed or underemployed and struggling just to get by.”

———

“Alapseintheethanoltaxincentiveisagastaxincreaseofoverfivecentsagallonatthepump.”

– SEN. CHUCK GRASSLEY

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Producers are hoping that a government ruling expected this summer to increase ethanol blends will reignite the type of demand growth seen years ago when competing fuel additive MTBE was phased out due to environmental concerns.

But even if the Environmental Protection Agency allows the maximum blend of ethanol in U. S. gasoline to rise to 15 per cent from the current 10 per cent, legal challenges could delay full implementation for months or even years, analysts said.

Meanwhile, U. S. unemployment near 10 per cent and questions about whether an economic recovery will gain traction has held down demand for fuel, leading to a glut of ethanol, they said.

“There’s been some discussion that unless U. S. auto owners start driving more that we are kind of seeing a modest ‘blend wall’ here. I hate to use the term ‘blend’ wall but people are having difficulty getting rid of ethanol here today,” said Dan Basse, president of Chicago-based consultancy AgResource Co.

A blend wall refers to a point where demand growth is stifled unless the blending rate is increased.

“In the last week we’ve seen ethanol prices collapse at the same time that crude oil prices have rallied and our ethanol clients are telling us that they’re having difficulty getting rid of supply,” he said, adding that current average ethanol producer margins are at minus 23 cents a gallon.

Michael Swanson, economist with Wells Fargo, was more optimistic.

“I don’t think the ethanol industry is in that bad of shape and they are going to go where the gasoline goes. I see, with a stronger economy, driving miles starting to expand again and gasoline utilization starting to go back up. That’s all very positive for the ethanol side,” he said.

U. S. law requires that 12 billion gallons of ethanol be blended into the U. S. fuel supply this year. Fuel blenders currently have little incentive to incrementally blend more than that, analysts said.

The law requires a gradual rise in corn-based ethanol use through 2015, but the year-over-year increases are minimal.

A 15 per cent ethanol blend, known as E15, is therefore critical for continued growth of the ethanol industry and a crucial swing factor for corn demand.

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Although the immediate outlook is discouraging for farmers, longer term Jubinville expects commodity prices, including grain, to rise due to inflation.

“(T)his is not going to be a wildly profitable agricultural year,” Jubinville told farmers at the Manitoba Special Crops Symposium Feb. 11 in Winnipeg. “I think we’re going to have periods of time where we’re going to have the ability to lock in profits – reasonable profits – but there’s going to periods of time where prices will be ebbing and flowing down to the downside.”

In the meantime, when the delivery basis gets within the top third historically, farmers should lock it in as it usually widens when futures prices improve, he said.

Jubinville said he sees signs of the “two, two and two” philosophy at play – grain prices rise for two years, fall for two and trade sideways for two.

“If we are moving into a sideways range that tells me farmers need to be prepared to sell into a rally,” Jubinville said.

“So we need to set pricing targets and act on them in 2010 and have a fairly conservative approach in mind looking for those pricing opportunities that are profitable.”

Farmers can also expect increase price volatility as capital fund speculators, who bailed out of grain prices when the U. S. economy began to falter, move back in. Some rallies will be a little higher than they’d otherwise, giving farmers better pricing opportunities.

Grain prices are trading in a lower range, but it’s higher than the old lower range, Jubinville said. In the past, the lower range for canola futures was $250 to $400 a tonne; now it’s $350 to $450, unless crude oil prices hit $100 a barrel or the American dollar tanks.

“I think the highs that we saw at the beginning of January might very well be the highs we’ll see all year,” he said. “So $9 (a bushel) canola or just better may be as good as this gets this year. Maybe $275 (a tonne) flax – that’s as good as it gets, unless something changes here.”

Canola exports are going better than expected given sales to China – Canada’s biggest canola customer last year – have dried up. Domestic crushing is down because the U. S. won’t import canola meal with traces of salmonella.

The longer-term outlook for canola is good because of Canada’s expanding crushing capacity.

“I think that’s a good thing for the industry right through the whole chain,” Jubinville said.

Soybean prices will also continue to trade sideways, he said.

The same for wheat. Prices have fallen because world production exceeds demand.

It’s going to be a difficult environment to make money on wheat, but the (Canadian Wheat) board (CWB) has an opportunity at least from the protein side.”

While wheat prices have fallen, prices for high-protein wheat haven’t fallen as much, Jubinville said.

Jubinville predicted the CWB’s first new crop Pool Return Outlook for No. 1, 13.5 per cent protein Canada Western Red Spring wheat to be announced Feb. 22 will be between $4.50 and $4.75 a bushel at the elevator.

Corn, barley and oats will also trade sideways, Jubinville said. But Lethbridge cash barley will trade between $135 and $145 a tonne, instead of $100 and $115 as it used to.

Domestic barley prices will continue to trade at a premium to world prices, Jubinville said.

North American barley yields remain flat, while corn yields keep increasing.

Meanwhile, domestic barley consumption continues to decline as there are fewer livestock to feed in Canada and increased imports of distillers dried grains from American ethanol plants.

Farmers can look forward to better prices next year as inflation builds in North America, Jubinville forecast. The U. S. government printed a lot of money, distributed it to banks to lend to stimulate its economy and lessen the recession’s impact.

Inflation is caused when too much money chases too few goods, he said. As the supply of money rises, its value usually falls.

“I think better times are coming for the grains and oilseeds and pulses. In that sense I’m quite optimistic,” Jubinville said. allan@fbcpublishing.com

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