Economic stimulus news out of U.S. surprises markets

Whether or not today’s “not tapering yet” surprise news will lead to a sustained recovery of crop prices won’t be clear until tomorrow, traders say.

The news that the U.S. Federal Reserve Bank won’t begin the “taper” yet immediately powered stock markets to all-time highs, but the news was only being digested as agricultural futures markets were closing. Stock markets are open until later in the day.

Some crop futures contracts saw a moderate pop upward on the news, but the reaction was muted.

Read Also

Manitoba harvest hits halfway mark: report

Harvest progress in Manitoba hit the halfway mark during the week ended Sept. 16, according to the latest crop report from the provincial agriculture department.

The non-taper pop in many contracts left most crop futures slightly higher overall today, while harvest pressure continues to exert a bridling influence on bullish gains.

The announcement that the Fed was not going to begin the process of reducing its purchases of debt and other securities came as a shock to many observers and prognosticators, who had been assuming the scaling-back of the radical interventions in finance was going to begin because of numerous signs of economic recovery.

To laypeople, ending radical life support treatments to the financial system might appear to be a positive development because it suggests the patient is getting better, but many investors and investment classes and products will suffer if the interventions are reduced, spooking investors.

The Fed’s quantitative easing has driven money out of yield-based investments such as bonds and the money market and driven them into stocks, commodities and non-traditional investments.

If interest rates normalize, most investors assume much money will roll out of the equity and commodity markets and return to the safety of the debt market.

The news that the Fed was going to continue buying large amounts of debt and assets as a way of continuing to suppress interest rates assuaged the fears of many.

Winnipeg ICE Futures Canada dollars per tonne

Canola Nov 2013    492.70    +3.30    +0.67%
Canola Jan 2014    501.20    +3.10    +0.62%
Canola Mar 2014    508.20    +2.50    +0.49%
Canola May 2014    514.40    +2.50    +0.49%
Canola Jul 2014    519.50    +2.40    +0.46%

Milling Wheat Oct 2013    233.00    unch    0.00%
Milling Wheat Dec 2013    238.00    unch    0.00%
Milling Wheat Mar 2014    244.00    +1.00    +0.41%

Durum Wheat Oct 2013    259.00    unch    0.00%
Durum Wheat Dec 2013    267.00    unch    0.00%
Durum Wheat Mar 2014    273.00    unch    0.00%

Barley Oct 2013    158.50    unch    0.00%

Barley Dec 2013    161.50    unch    0.00%
Barley Mar 2014    163.50    unch    0.00%

American crop prices in cents US/bushel, soybean meal in $US/short ton, soy oil in cents US/pound

Chicago
Soybeans Nov 2013    1347.75    +5.25    +0.39%
Soybeans Jan 2014    1350.25    +7.25    +0.54%
Soybeans Mar 2014    1332.5    +7.5    +0.57%
Soybeans May 2014    1307.75    +8.75    +0.67%
Soybeans Jul 2014    1299.25    +7.75    +0.60%
Soybeans Aug 2014    1275.5    +5.5    +0.43%

Soybean Meal Oct 2013    427    -1.8    -0.42%
Soybean Meal Dec 2013    425.8    -0.8    -0.19%
Soybean Meal Jan 2014    424.5    +0.2    +0.05%

Soybean Oil Oct 2013    42.47    +0.47    +1.12%
Soybean Oil Dec 2013    42.71    +0.47    +1.11%
Soybean Oil Jan 2014    42.95    +0.49    +1.15%

Corn Dec 2013    456.25    +2.25    +0.50%
Corn Mar 2014    468.75    +2.25    +0.48%
Corn May 2014    477    +2.25    +0.47%
Corn Jul 2014    483.75    +2.25    +0.47%
Corn Sep 2014    488.5    +2.25    +0.46%

Oats Dec 2013    303.75    -3    -0.98%
Oats Mar 2014    306.25    -1.25    -0.41%
Oats May 2014    307.5    unch    0.00%
Oats Jul 2014    300.75    unch    0.00%
Oats Sep 2014    307.25    unch    0.00%

Wheat Dec 2013    646.5    +3.5    +0.54%
Wheat Mar 2014    657.5    +4    +0.61%
Wheat May 2014    662.75    +4.25    +0.65%
Wheat Jul 2014    658.25    +3.5    +0.53%
Wheat Sep 2014    662.75    +3.75    +0.57%

Minneapolis
Spring Wheat Dec 2013    700.25    +0.75    +0.11%
Spring Wheat Mar 2014    712.5    +0.25    +0.04%
Spring Wheat May 2014    722.5    +2    +0.28%
Spring Wheat Jul 2014    728    +0.25    +0.03%
Spring Wheat Sep 2014    731.75    -1.5    -0.20%

Kansas City

KCBT Red Wheat Dec 2013    692.5    +2.25    +0.33%
KCBT Red Wheat Mar 2014    698.5    +2    +0.29%
KCBT Red Wheat May 2014    701    +1.75    +0.25%
KCBT Red Wheat Jul 2014    691    +3.25    +0.47%
KCBT Red Wheat Sep 2014    700.75    +3.25    +0.47%

Light crude oil nearby futures in New York rose $2.65 at $108.07 US per barrel.

The Canadian dollar at noon was 96.97 cents US, down from 97.17 cents the previous trading day. The U.S. dollar at noon was $1.0312 Cdn.