Posted February 21st, 2013, 12:42
This is a general warning over all Grains but is less specific to Lentil and Chickpea and most specific to Canola and Wheat in our area.
The drop in the Canadian dollar is very concerning and we are reiterating all our sales positions by recommending a general catch-up and/or a surpassing of those positions if you too are nervous on a more macro level.
There is no doubt Soybeans are exerting leadership here but there is the potential for a perfect storm of headwinds: Overbought Equity markets, Federal Reserve tightening, more Benign US weather and most important the repercussions of the Canadian Dollar drop.
Anyone who tells you that a dropping Canadian dollar is Bullish our grains is uninformed. Canadian currency is a benchmark for Risk-On Commodity plays and is a safe haven for hedging against commodity inflation. A drop here is a signal of a trend away from Commodities of which I believe the Grains have specifically been a safe haven harbour of money still fearing the Equity markets.
I believe in current Grain fundamentals but they can act irrationally as long as net flows of money are out of Commodities. And while a medium-term to long-term drop can be met with a precipitous rise once Fundamentals reassert themselves, that could be a crop or two away.
We are not adding to any sales today as our positions have been calculated against this possibility but we do believe there is reason to catchup over the next hours, days (or weeks – if you are less concerned then us). We recommend hours to days.
Spring Wheat should probably be 75% but otherwise here are the current Benchmarks we recommend catching up to and current bids.
Canola 80% sold. Bid is $14.22
Pea 75% sold. Bid is $8.43
Flax 60% sold. Bid is $14.52
Lentil is 40% sold. Bid is 18.5c
Chickpea is 100% sold. Bid is 30.5c
Eth.Wht is 100% sold. Bid is 7.15
Durum is 75% sold. Bid is $7.79
Wheat is 55% sold. Bid is $7.58
I’m traveling today. Text with questions.