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Strike Gold.
(Catch the rainbow with Farmbucks.)
With marketing I am often asked: when is “good enough” actually good enough? We measure this in business with many quantifiable factors related to profit margin, risk tolerance and other key measurables. Our biggest challenge is to align all our goals with calculated measurements and risk to stay on the right course. Simply put, you must focus and do what is best for your farm business.
In the spirit of St. Patrick’s Day, let me remind you that luck isn’t just for the Irish. In fact, we at Farmbucks do not believe in luck since we created our own with our slick app that provides thousands of new price bids each day for you. Feel green all you want, but make sure it’s green dollar signs in your eyes and not green with envy because you did not sign up for Farmbucks. Go ahead, sign up! We won’t even pinch you for doing it late, we promise. ;)
Weekly Market Recap:
This week we saw more ups and downs in the markets. It's all about the latest headlines making and influencing ag news. If there's any de-escalation or friendly news then markets fall. If tensions increase, markets rise again.
There's chatter that Ukraine's biggest port city Odesa may be next on Russia's hit list. Damage to its export terminals would be bullish news. The war is not over yet. The swings in these markets are not over either. Much uncertainty still lingers in the air.
The Omicron virus is spreading in China. There are large shutdowns and millions of people under lockdown. Crude oil dropped substantially mid-week in part due to lessened demand from China.
One to watch though is CP Rail. It is on the verge of a strike if no results are found by Sunday. A strike would only exacerbate our supply line shortfalls and make matters worse. If it is resolved quickly then we will see minimal impacts.
Deals of the week:
CANOLA - $26.00+ old-crop and $21.25+ new-crop
Canola: Staying strong! Both old- and new-crop futures continue to hold near all-time highs and are bouncing around the upper range of charts. This week canola experienced pressure due to funds sell-off, lower crude oil prices, and lower soybeans and palm oil. In support, we have Argentina looking to raise its soy export taxes and a lack of Ukrainian sunflower oil exports. New-crop canola in particular is holding strong as we have crops fighting for acres and uncertainty around the availability of input supplies like chemicals here in Canada.
Soybeans keep failing to rally despite bullish news. Argentina's suspension of export registration for soy meal and soy oil is bullish but the stabilizing weather in Brazil and Argentina has been bearish. Argentina's harvest just began.
Wheat: Up, limit-down, up, down. There's big spec money moving in and out of the wheat markets making it react sensitively and in big ways from any war or weather news. Minneapolis has been the calmest of the three, trailing whichever way Chicago and Kansas move. Russia has been exporting wheat out of the Black Sea so some “business as usual” had softened the market but then the Ukrainian Agricultural Consultancy reported a potential 39% drop in Ukrainian spring grain acreage being planted and some export restrictions that may be coming had markets head higher. Then Wednesday hit with all three wheat nearby futures plunging limit down as Ukraine and Russia reportedly made “significant” progress towards a 15-point neutrality plan to end the war. Bearish wheat news included: Russia's ports are open and have moved lots of grain, although there is a temporary ban on shipments to EEU. India is also looking to export more high-quality wheat to fill the shortfall. The U.S. forecasts turn wetter for the HRW wheat crop over the drought-stricken Plains.
Still, lots of uncertainty in corn and wheat. The U.S. winter wheat rating keeps declining. Texas, Kansas and Oklahoma are very dry and the moisture in the forecasts looks to be just temporary relief. Russia could still implement a further ban on wheat as domestic prices surge due to the devaluation of the ruble.
Barley: Seeing some old-crop bids soften but for the most part bids remain strong. If CP goes on strike for any significant amount of time there may be some strength seen in feed barley bids as feedlots may become shorted corn for feed. Ukraine and Russia both have export bans on barley and European prices have risen to equivalent levels to ours.
Many unknowns remain with corn. Ukraine acres are up in the air. As mentioned last week, if Ukraine can’t get a crop in, there may be good opportunities and demand for our new-crop barley. South America may be growing a record large corn crop and so it will be monitored closely as is important to the world balance sheet. Speculation is that some U.S. corn acres may be switched to soybeans due to corn's high input cost.
Peas: A little mixed action this week. Seeing strength for greens and new crop yellows. While also seeing a few old-crop yellow pea bids soften.
Oats: Oat bids have been quiet. Some old crop bids have softened.
Around the farm: What a beautiful week! We spent the week trucking canola out to elevators for export. I don't mind working and shovelling bins out in the near-zero temperatures. Still, there’s lots of snow here to melt. As you can tell by my pictures, my yard is still frozen enough that it’s not a total disaster.
I spoke with more reps this week and, yes(!) BASF did increase its cost of Liberty by 40% so I sure hope you have your needs locked in! I received a nice PR email from them stating that due to "high global demand for finite raw materials; sharp increases in fuel and energy costs; and unreliable international transportation and logistics corridors have led to an unprecedented and substantial increase in the cost of goods." Lovely isn't it? And did I mention that they only guarantee one pass at a rate of 1.4L/ac to farmers that have booked seed? What a mess.
Anyhow, I hope you all get to enjoy some downtime as spring nears and be sure to keep an eye on prices!
Cheers y’all!
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