Grains were little changed over the past week. Prices are getting closer to the lower level of support in their recent trading ranges. Hopefully prices can catch hold near current levels to prevent more short selling by speculators.

 

Large trading funds are short 82,000 soybean contracts. This should provide support at some time. They are also short a record number of soybean meal contracts. They remain stubbornly long 52,000 wheat contracts.

 

USDA released its monthly demand/supply report today. Changes to the fundamentals were minor, so prices didn’t change much after the report. US soybean numbers were a bit friendly, but Brazil’s crop was raised 2 mln mt., to offset.

 

At 125 mln mt, Brazil will have another record soybean crop. Their currency, the real is at a record low, making their beans very competitive. Some question if China will import as many ag products as promised in Phase 1.

 

The coronavirus is hurting the world economy, especially in China. Many manufacturing plants remain shut down, and crude oil demand has declined markedly. Travel has been hard hit, as fear of contacting the disease is rampant.

 

The last of the $16 billion is going out to US farmers now. These payments were to counter the affects of the US/China trade war. One third of US farm income is coming from these subsidies. The US is at least trying to help their producers.

 

The Canadian government seems to be totally ignoring our farm sector. Our farmers too suffered from the lower prices caused by the trade war, but without any subsidies. All they have done is added the carbon tax to grain drying etc. This is causing even more hardship on Canadian grain farms.

 

Meanwhile agriculture provides more carbon credits than any other sector. Shouldn’t farmers get credits for growing crops? For sure they shouldn’t be punished and penalized for getting grain into a marketable product.

 

Lobbyists are pressuring the government to stop charging the carbon tax on grain drying, but as mentioned, agriculture isn’t even on our government’s radar. Very sad, since ag is a huge contributor to society, the environment and the economy.

 

Frank Backx

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