Seamus Hoban : Ontario Grain Market Commentary for January 27

Grain Market Wrap

CORN
The corn market continued its gradual slide this week, with analysts expecting expanded US plantings and lower old crop exports to result in adequate US supplies this year and next.
Funds have liquidated nearly 100,000 contracts since the disappointing USDA report was released, however still maintain a 177,000 contract long position. With little prospect of positive news in the near future, many producers are also opting to sell.
The slump in prices has improved ethanol margins to around 25c/gallon (66c/bushel), up from 20c/gallon (53c/bushel) last week. Some buyers are taking the opportunity to lock in these margins for the coming year.
Falling fertilizer prices are expected to provide an added incentive for producers to increase corn plantings in 2010.
SOYBEANS
Soybean markets stabilized this week after the previous two weeks of rapidly falling values.
Strong Chinese exports continue to drive the market, however the trade is watching closely reports of increased hog disease outbreaks which may slow meal and feed demand. Exports may also be impacted by the Chinese Government’s decision to restrict bank lending, with some Chinese importers having letters of credit cancelled by their banks.
The Canadian Dollar reached a 5 week low as crude oil and stocks dropped amid concerns the global economic recovery is slowing. However despite the slump the majority of economists still expect the Canadian Dollar to reach parity with the US currency by the end of March this year. 

WHEAT
Values followed corn lower during the week as surplus wheat is increasingly forced to compete in the feed market.
The market did however receive some positive news in surprisingly high US export sales figures. Net sales figures of 825,800 metric tonnes surpassed the trade expectations of 250,000-350,000 metric tonnes. The increased export figures are seen as an indicator that global consumption may increase in response to low prices.
US basis levels received some support in the US as weather conditions caused land transport issues. Shipments from Minneapolis have also been disrupted by weather concerns. Locally basis levels were also supported by weakness in the Canadian Dollar.
Contract prices for January 27th, 2010 at the close are as follows:
SWW at $168.93 per tonne ($4.60/bu.), SRW at $146.15 per tonne ($3.98/bu.), HRW at $180.32 per tonne ($4.91/bu.), and HRS at $161.03 per tonne ($4.38/bu.).
Chart of the Week $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 0.0010.0020.0030.0040.0050.0060.0000/0101/0202/0303/0404/0505/0606/0707/0808/0909/10$CND/BushelMillion BushelsOntario Corn Carryout and PriceCARRYOUT Avg Weighted Price/bu

 Chart Of The Week: