Glacier FarmMedia COVID-19 & the Farm



The Good, Bad & Ugly

The Good, Bad & Ugly

The Good: Spring wheat managed to buck the lower trend in the winter wheat futures and posted a one to two cent grain today. This is encouraging as the market has moved off of the contract lows and is moving back towards the recent highs posted at the beginning of the month. The next technical resistance is the 40 day moving average which is just above the US$5.10 per bushel level. A move above the US$5.10 level would push sprain wheat back into the US$5.10 to US$5.30per bushel trading range that was established in July. This maybe not the most bullish news, but at least it isn’t bearish!

The Bad: Let’s see. The finance minister quits. The economy seems to be stuck in neutral until a vaccine arrives. Canadian COVID-19 cases are increasing just weeks before school begins. Sounds like the loonie crashed today. Wrong! The loonie pushed above 76 U.S. cents for the first time since January 29th. The strength in the loonie is putting a break on canola futures and causing wheat basis levels to move lower. The news today confirmed that the loonie is not trading on the inherent strength of the Canadian economy, but is gaining because of the weakness of the U.S. Greenback. How long does the weakness continue in the U.S. dollar? It will be difficult to see a strengthening of the U.S. dollar until a) and election occurs and b) a effective vaccine is being delivered to the U.S. population.

The Ugly: Lean hog futures in the U.S. appeared to be breaking out to the upside over the past week. The nearby October contract dropped by 3.9 per cent to 51.4 cents per pound today as the market snuffed out the recent rally. The hog market has been trading water since June with values trading about 17 cents per pound below the pre COVID-19 trading range. This is not good news for feed grain demand on both sides of the border as farmers are going to have to liquidate the herd if values remain at unprofitable levels.