Grain Markets Errol?

[Old Cowzilla]

Feeder cattle remain in a G-Force price dive . . . . $50/cwt futures washout or 20% plunge since late September. Technicals oversold, but fundamentals not so much. Feeders; tempting to take profits on your put options or put option bear spreads, but prudent from risk management point-of-view to hold your cattle price protection until marketings. Cattle board overdue for-a-bounce, but economic uncertainties persist as beef prices slide, packer kill margins negative . . . [email]errolanderson@substack.com[/email], Calgary

That was our $25 canola moment (in the feeder cattle market ) and me and others guys know we won't see that selling into that market next year. I think constant retraction in North American cattle numbers will limit the fall better than canola.Still lots of old cattle guys jumping ship.

[shtferbrains]

That was our $25 canola moment (in the feeder cattle market ) and me and others guys know we won't see that selling into that market next year. I think constant retraction in North American cattle numbers will limit the fall better than canola.Still lots of old cattle guys jumping ship.

One of the best chances in a lifetime to disperse.

I evan know a guy that bought about 30 from a dispersal.
First time in about 10 yrs cows in the yard.

[errolanderson]

The U.S. Federal Reserve now turning full-circle from threats of more rate hikes in-the-name of taming inflation to . . . how many rate cuts in 2024.

Cushy soft landing now in the rhetoric. Choking as I write this.

Dow Jones zooms to record high on glorious rate news. Mark this one on your calendar . . . .

Central bankers totally lost, no guidance.

[errolanderson]

Are central bankers panicking? Tough year ahead for banking industry’ more layoffs, mergers . . . .

Fed governors saying just in November ‘rates higher-for-longer’. This is the new normal . . . get used to it.

Oh, by the way, if you go broke, that’s good news in our (central banker) battle to tame inflation. It shows our policies are working.

Now the music has suddenly changed this week ‘rates lower ‘n faster.

Fed chair Powell hinting @ possible three (3) rate cuts in 2024. Bank of Canada simply quiet as Canada’s recession deepens.

[dave4441]

USD Weakening and in return CAD strengthening is going to impact pea, lentil and canary prices (would guess it will not help the durum pricing either). Part of the reason these prices were able to be so strong this fall was the CAD weakness. As this changes it is harder to increase prices in USD to the destination buyers and this will reduce the prices to farmers. It would be different if demand was heavy and we were at a USD $500/MT commodity but when prices are $800-1200/MT a 3-4% shift in dollar is impossible to make up in the destination market.

[wheatking16]

USDCAD is breaking lower through a trendline.

[Old Cowzilla]

Retail sales in USA strong and debt to GDP dropped last month as did unemployment numbers. How does that play for start of the year ? Mixed messages for sure.

[AlbertaFarmer5]

Fundamentally, what reasons would be provided ( post factum of course), for the CAD to appreciate against the USD at this time? Commodity boom? That would have been the logic until recently. But with the boom in US oil and gas, is that still valid?
Shifting political tides in both countries next year? US into greater uncertainty(markets don't like uncertainty), Canada possibly postponing our experiment with the anti industry far left?
US to cut rates sooner and deeper than the Canada?

[dave4441]

Fundamentally, what reasons would be provided ( post factum of course), for the CAD to appreciate against the USD at this time? Commodity boom? That would have been the logic until recently. But with the boom in US oil and gas, is that still valid?
Shifting political tides in both countries next year? US into greater uncertainty(markets don't like uncertainty), Canada possibly postponing our experiment with the anti industry far left?
Canada to cut rates sooner and deeper than the US?

This is a weakening USD and very little to do with Canada (except some interest rate spread arb). Sense is risk off and move to equities which generally means lower USD value. USD has been high for a long time and would happen eventually.

The attitude of lower interest rates means more investment in stock market. As long as they are correct, and inflation is lower longer then I would suggest a stronger CAD.

In my 22 years i have never seen CAD stay at 1.35 - 1.38 for any length of time. It will always correct towards 1.30-1.33. This can knock 5% out of our prices at farm gate.

In periods of strong demand or weaker commodity prices this shift moves to the destination buyers price. In weak periods it comes off the grain price.

If Canada cuts interest rates soon then this all could be adjusted but the USD strength/weakness is still the true measure of value for most currencies.

[errolanderson]

Powell rate reversal about-face. Calling for multi-rate cuts by Fed in 2024.

USD tumbles, loonie rallies by-default. Economic reality overcoming central bankers.