Glacier FarmMedia COVID-19 & the Farm

Experts

 

The Good, Bad & Ugly

The Good, Bad & Ugly

The Good: January canola futures started the day on a weaker note, but rallied during the session to close up C$4.20 per tonne and settle at C$1009.80 per tonne. This breaks the string of losing sessions last week and keep canola in the recent trading range. Many participants in the January contract have rolled their positions to the March contract which was up C$4.10 per tonne to close at C$984 per tonne. Cash prices have across the Prairies remained relatively stable through the recent volatility, which indicates that the tight stocks situation in the Prairies continues to support the value of canola.

The Bad: The U.S. dollar was on a roll today as the dollar index rallied 0.22 per cent to close the day at 96.32 points. The U.S. dollar has taken a breather in the past two weeks as the the greenback has remained rangebound. The Canadian government has announced new policy guidance for the Bank of Canada, which adds in a labour market component to the clear inflation target of two per cent. On the other hand, the U.S. Federal Reserve is scrambling to slow the economy by increasing interest rates “sooner than later”. This should cause the dollar index to rally into 2022. The bad news is that will pressure commodity prices as a stronger dollar will make most commodities more expensive local currencies. Keep an eye on the U.S. dollar as we move into 2022!

The Ugly: Don’t look now, but lumber is back. With the imposition of new duties on Canadian lumber and increasing demand for houses prices have moved higher since hitting a low in mid-August. Lumber has been often cited as the poster child for high prices curing high price, but the narrative has changed since the middle of November. Prices have more than doubled from the August lows and is now US$1,114.30 per thousand board feet. Remember the U.S. CPI number for November was 6.8 per cent, with lumber prices one of the contributors to increased housing costs. Inflation is alive and well in the U.S. economy.