Look at the big picture and the local situation, grain market analysts say

Global economies appear to be “falling off a cliff,” with reduced demand for crude oil and other commodities pushing down grain prices, an Alberta-based commodity analyst says.

At the same time, lower than expected. US corn yields are supporting canola, wheat and soybean prices, said Errol Anderson, president of ProMarket Communications.

Be prepared to move quickly and take advantage of price hikes this fall and winter, he advised.

Errol Anderson.


“The big clue is corn yields in the United States. The Pro Farmer Crop Tour has been underway and they got an average corn yield estimate of 168.5 bushels per acre,” Anderson said Aug. 31, and corn is considered “the king of grains” when it comes to price forecasts. .

“That surprised the market because it’s lower, so the corn market has really been a driving factor recently. This provided support for canola, wheat and soybeans…so it gave us a boost.”

Falling crude demand, “the king of commodities,” is another general indicator, he said, noting that corn is an important feedstock for ethanol. The drop in oil prices is a warning that demand from Asia is tight.

“Our view on grains is that when you see these rallies like corn is having right now, these are opportunities to lock in some prices, because all of a sudden these markets are going to start going down,” Anderson said during a conference call. Weekend. interview of the month “Now, looking at local prices, canola has basically done well. It is holding there.

It was good to have grain to sell before prices fell, said Jason Lenz, vice president of Alberta Wheat, adding that canola prices are still at profitable levels.

“I think they will stay relatively high for the rest of this year if the war in Ukraine continues.”

Feed barley prices could also remain strong on lower-than-expected corn yields in the US, said Lenz, who farms near Bentley. Furthermore, it only takes one severe weather event in another major grain-producing country to boost Canadian prices.

“I will be concerned about falling prices if the costs of our inputs, such as fertilizers, remain high,” he said. “Everything goes down much faster than it goes up.”

If crude oil falls below $80 a barrel, canola prices will likely drop because they are tied to biodiesel production, Anderson said, adding that he suspects oil is more downside due to the downturn in the economy. global. The price fell below $82 during the first week of September before recovering a bit when this edition was going to be published.

“The Saudis certainly want to keep this price high and are threatening to cut production,” he said. “They can’t keep it because now commodity prices are dictated by demand, not supply. You can talk all you want about reducing supply, but if there’s no demand, who cares? Prices will fall anyway.”

While canola is doing well, wheat is down. Ukrainian grain coming out of black sea ports in export markets could keep wheat prices low, Anderson said, calling the wheat market “asleep.” He is “slightly optimistic” on barley prices.

“Once we get into the fourth quarter, barley prices will start to go up a little bit. There’s no export market for barley at the moment, as if it’s not cheap enough for the Chinese to come in, so it’s really just a local domestic market.”

He expects a bottom to emerge in the pea market this month, “but international buyers are very, very quiet,” he said. “It could be a painfully slow process to recover. Maybe in late fall, prices will start to improve.”

Durum wheat and oat prices are also well off their highs, but prices are likely to rise this fall and winter, Anderson said.

He urged farmers to keep an eye on local levels because they track buyer demand.

“If the basic levels get very, very wide, then that’s when they should lock futures or get put options, things like that,” he said. “The other side of the coin is that if the core level gets too tight due to buyer demand, it’s a good time to cash in on the grain. And if you are optimistic for the winter market, take some buying options”.

Jonathan Dredger.


There is a lot of uncertainty in grain markets and farmers who can afford to be patient could benefit from higher prices, said Jonathon Driedger of LeftField Commodity Research, noting that there are still significant problems with grain exports in Ukraine. He said grain prices remain comparatively high.

“I’d like to say there are easy answers,” Driedger said when asked about priorities for farmers. “There are reasons why prices could or should remain supported or rally, that sort of thing, and it wouldn’t be hard to come up with a list of reasons why there could be something bullish here. It’s really dry in the EU and there is uncertainty about planting in Ukraine.”

Grain prices are under normal seasonal pressure, Driedger said, so it could take time for prices to regain their footing.

“If a person needs to sell grain in the next short window, this is a time when prices are normally under some pressure, so maybe in some way how patient a farmer can or can’t be is one thing. consider.

“I think the combination of opportunity and risk appetite and tolerance are two important things to think about. If you haven’t put a price on anything, most of these crops are still priced pretty well, so you may want to do something.”

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