The Good: Spring wheat (and wheat markets in general) had been in a funk for the past three trading sessions, but the market decided to move higher today, which essentially erased most of the losses since Friday. December spring wheat futures closed the day up 15.75 cents per bushel to settle at US$9.035 per bushel. The spring wheat futures market has been rangebound since the middle of July and has mostly traded between US$8.60 per bushel and US#+$9.30 per bushel. Today’s move places the December contract firmly in the middle of the trading range. We need to wait for the September 30th small grains report for the market to break out of the trading range.
The Bad: The U.S. dollar has been on a tear recently with the dollar index currently at 93.462 points. The U.S. dollar rallied in mid August only to fail at the 93.60 point level. The Federal Reserve indicated today that it may be time to begin tapering “soon” which boosted the dollar as the market feels that higher interest rates are on the way. Given that the U.S. will likely be the first country to increase interest rates in the post COVID environment, the dollar is catching a bid against most currencies. This is bad news for agricultural (and other) commodities, which are traded mostly in U.S. dollars.
The Ugly: The forecast is calling for dry conditions to persist across most of the Prairies through the end of September. The drier than normal conditions in September have helped boost harvest progress on the Prairies, but there is a down side. The moisture conditions across the Prairies are poor to very poor and we need to see some above normal fall rains in order to boost subsoil moisture reserves. Forecasts are not positive as the dry trend is expected to continue into Thanksgiving.