The US dollar showed some good strength today gaining almost nine-tenths of a cent, which kept US equity markets rather quiet again today.
Grains were very slow as most traders are opting to stay on the sidelines until the USDA report on August 12, as the expectation for larger production estimates for all crops has the markets in a bit of a bearish mood right now.
The higher US dollar also put a damper on sales of US grain which did not help matters either.
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The Canadian dollar finished down .0049 points, closing at .9241 US, down .0035 points from last week’s close.
The Dow Jones Sept quote closed up 96 points at 9325, up 200 points from last week.
Crude oil was off only slightly, down $1.01 a barrel, closing at US $70.93 a barrel, up $1.48 a barrel from last week.
Corn closed down 10 to 16 cents a bushel today. down 17 cents a bushel from last week.
Beans ended up 5 cents a bushel to 14 cents a bushel today, up 50 cents a bushel from last week.
Wheat closed down 6 to 12 cents a bushel on the various US exchanges.
Minneapolis Sept wheat futures closed down 6 cents a bushel today, down 32 cents a bushel from last week.
Canola finished down $.30 to $1 a tonne today, but ended up $10 a tonne higher over last week.
Barley closed down $5.10 a tonne at $138.10 a tonne. Down $16 a tonne from last weeks close.
Some quick calculations of EPO premiums for a #1 CWRS 13.5 per cent,
-80 per cent is at $19.04 a tonne or 52 cents a bushel.
-90 per cent is at $35.07 a tonne or 92 cents a bushel.
-100 per cent is at $55.06 a tonne or $1.50 a bushel.
The PRO is $273 a tonne, the initial price right now is $186.30 a tonne
-80 per cent is $218.40 a tonne
-90 per cent is $245.70 a tonne
So if you do an 80 per cent EPO at $218.40, you pay $19.04 a tonne so you net $199.36 a tonne. This is only $13 a tonne over the initial price.
If you do a 90 per cent EPO at $245.70, you pay $35.07 a tonne so you net $210.67 a tonne. This is $24.37 a tonne over the initial price
If you do a 100 per cent EPO at $273.00 a tonne, you pay $55.06 a tonne so you net $217.94 a tonne. This is $31.64 a tonne over the initial price.
When making the decision to use an EPO and at what level it comes down to how much you think the PRO may fall, and how much you are willing to spend to guarantee a floor price.
As far as from a timing perspective, EPO premiums do definitely increase as wheat futures fall so you want to try to watch markets closely and lock in the EPO at a time when futures are rallying as the EPO premiums should diminish accordingly to the amount the futures rise (in theory).
