Market Watch
Canadian grain exports are good this crop year, but American futures markets are concerned about the slow pace of U.S. exports.
Soybean exports lag last year’s pace by about 50 percent, corn is behind 18 percent and all wheat exports are down about seven percent.
Part of the reason is strong competition from South American soybeans and Black Sea feed grains. Also, importers might be holding off buying in expectation that the global financial turmoil will push grain prices lower.
Corn future prices are down about 11 percent in November and down 25 percent from the recent high set in August.
As grain prices fall, expectations rise that the bargains will attract buyers and exports will increase.
However, the uncertainty about the global economy is causing investors to shift money from riskier investments such as commodities to the stability of U.S. treasuries, and that is pushing up the value of the U.S. dollar. For example, last week the U.S. dollar was up 17 percent compared to the Indian rupee since April.
The rising U.S. buck is partly offsetting the benefit to buyers of falling grain prices.
So long as European leaders are unable to rally a sufficient response to restore confidence in the euro zone, the U.S. buck will be supported by investors looking for a safe haven.
Proposals on the weekend from Germany and France for more decisive action cheered markets yesterday, but getting consensus from other eurozone countries will be difficult and slow.
So long as the situation in Europe remains in flux, expect a fairly strong U.S. dollar.
