Nov. 27 — Alarming news out of Dubai that Dubai World could default on some of its estimated US$59 billion debt sent financial markets tumbling, pulling all other markets down as well.
As the day went on we did see a retracement in grains, as the U.S. dollar backed down off its highs for the day.
There was rather limited trade today in the U.S. as many were on an extended long weekend holiday, so the few who were trading over-exaggerated the market volatility rather quickly.
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Gold closed down $12.80 at $1,174.20, up $28 over last week.
The U.S. dollar closed up 15/100 of a cent today, down seven-10ths of a cent from last week. The Canadian dollar closed down 1.54 cents today at US94.1 cents, up 0.07 cents over last week.
The Dow Jones December quote closed down 150 points at 10,292 today, down 11 points from last week’s close.
Crude oil closed down $1.91 a barrel today at US$76.05, down $1.42 per barrel from last week.
Corn was up 3.4-5.4 cents a bushel today, up six cents a bushel for the week. Beans were down 1.4-3.6 cents a bushel today, up seven cents a bushel over last week’s close.
Wheat markets were mixed, up two to down four cents a bushel today. Minneapolis December wheat futures were down 1.4 cents a bushel today and down 11 cents a bushel from last week’s close.
Canadian canola futures were mixed, up $1.20 to down $7.20 per tonne today, and up $1.10 per tonne over last week’s close.
January Western barley futures were up 50 cents per tonne, closing at $158 today and down $2 per tonne from last week.
Well, it doesn’t look like there has been any resolution to the dispute between CN and its engineers, so we may be facing a strike over the weekend which will no doubt impact grain movement and cause further chaos in the markets.
The concern over the situation with Dubai World, Dubai’s global investment holding company, is that if it does default it could cause another ripple effect that could hurt many other financial and fund companies, like what happened in the U.S.
Right now there is a fair bit of speculative money in commodity markets and if they liquidate to secure funds to try to stay alive, we could see a meltdown in grain prices because of that. If that happens, prices will stay low for quite some time, as buyers everywhere are going to have to check their bank accounts to make sure they have funds or credit available to purchase grains.
Let’s hope this gets resolved in a quick and positive way.
That’s all for his week. — Brian
— Brian Wittal has spent over 27 years in the grain industry, including as an elevator manager and producer services representative for Alberta Wheat Pool, a regional sales manager for AgPro Grain and farm business representative for the Canadian Wheat Board, where he helped design some of the new pricing programs. He also operates his own company providing marketing and risk management advice for Prairie grain producers. Brian’s daily commentaries focus on how domestic and world market conditions affect you directly as grain producers.
Brian welcomes feedback and information on market conditions in your area, such as current offering prices, basis levels, trucking premiums and special crops contracts. Contact Brian today.
