Chart analysis and commentary by Harold AGJ Davis Chart analysis and commentary by Harold AGJ Davis Privacy Policy    Information is secured from sources believed to be reliable, but 100% accuracy cannot be guaranteed. For analytical purposes, some price data for illiquid markets may be  interpolated.    Persons associated with Canadagrain.com deal commercially with businesses active in Prairie grain markets and may hold positions on their own accounts in commodities discussed herein.    Prairie Crop Charts does not provide specific marketing advice or advice on trading opinions on futures and option contracts. Canadagrain.com, 958 – 167 Lombard Ave., Winnipeg, MB R3B 0V3, tel: (204) 942-1459  fax: (204) 942-7652 Site design & maintenance by Branscombe Consulting Copyright 2012 Canadagrain Copyright 2012 Canadagrain.com Reproduction and/or redistribution without permission are prohibited. Mobile Feed Grains: Corn’s advance restores Prairie values   The recent rapid recovery in Chicago Corn prices expressed in Canadian dollars has left Prairie feed values behind. As a result, value ratios are declining again and seem headed towards the extraordinarily cheap levels that prevailed throughout much of 2011. This should provide important underpinning for Prairie Feed Grain prices by protecting local sources of supply from competition from more expensive US substitutes and by making local products attractively priced in the global export market.   Price gains by Canadian Feed Grains may not be immediate or rapid because signals from Corn might be confusing in the near term. Note that Corn has repeatedly encountered resistance as it approaches the CDN$7/bu level and may do so again. However, a firming and two-way Corn market should go a long way to dispersing the bearishness sentiment that has been threatening since harvest. Chart analysis and commentary by Harold AGJ Davis Feed Barley: Expect support followed by recovery   In the short term, Feed Barley average prices seem to be under pressure, but this might be short-lived.   Both Alberta and Saskatchewan Feed Barley prices enjoy close and important support levels that should provide enough underpinning to halt this downdraft. Alberta average elevator prices are nearer to their support than Saskatchewan, and the Spread chart endorses the notion that Alberta could be the better performer in coming weeks. So, expect Alberta’s price premium to increase.   Looking further ahead, firming Feed Barley prices should follow Corn’s leadership. With Corn rallying while Alberta Feed Barley weakens, the value Ratio clearly shows that Feed Barley is a relative bargain!   On top of that, American cash prices quash any notion that Canada is overpriced. Comparing Saskatchewan Feed Barley against elevator prices for Feed and Malting Barley in North Dakota expressed in Canadian dollars, the spreads are still so wide that Saskatchewan and Alberta could even rally to catch up to US prices. For global buyers, Canada is cheap. Chart analysis and commentary by Harold AGJ Davis Durum Wheat: The Bear could be exhausted   Since Montana and North Dakota average elevator prices for Durum Wheat expressed in Canadian dollars made their price highs in late June 2011, they have experienced a painful bear market to arrive at current levels near CDN$8/bu.   In recent weeks, Durum’s discouragement has been particularly acute. The old uptrend line has been broken and indications of potential support near the CDN$7/bu area are based on distant price action. It would seem that there is more pain to come, but probably not.   In fact, this A-B-C correction may be over! Note that legs “A” and “C” are the same size. This is typical of “swings” or “measured moves” and strongly suggests that the bear market in Durum is now exhausted. Moreover, once “C” finds its bottom, the recovery in Durum could be substantial and may even be the first rally of a new trend.   Although no upturn has developed yet, there is a danger in being pessimistic. Stay tuned. Malting Barley: Correcting, not the end of the world   North Dakota and Montana average elevator prices for Malting Barley expressed in Canadian dollars per bushel have broken down out of their rising channel. It is normal for markets that have advanced a long distance over an extended period of time to pause and catch their breath.   This is known as a “correction” and simply means that the Malting Barley market has moved into neutral, and it is not necessarily bearish. Corrections or pullbacks often trade down to support in order to test underlying demand. Malting Barley seems to have a zone of support that starts at the CDN$5.65/bu level and extends down to CDN$5/bu. This should function as a floor for the next few months.   Thereafter, if lower prices do uncover good demand, Malting Barley could attempt a fresh uptrend or, if potential buyers are in no great rush, building a new directional consensus could take longer. However, it should be remembered that a really strong market like Malting Barley that can motor from $2 to $7 in just 15 months is unlikely to fade away too quickly. Chart analysis and commentary by Harold AGJ Davis Corn – The short term outlook is improving   It seems that CBOT Corn expressed in  Canadian dollars is having trouble maintaining a clear downtrend. The current downtrend is already this market’s third attempt since the late August to find the right rate of decline, yet the bears seem timid. Even now, CBOT Corn in CDN$ has managed a small bounce up and away from support.   In this environment, it is no surprise that Manitoba average delivered elevator Corn prices have been able to hold above their underlying support level.   Moreover, local market demand for Corn seems sufficiently strong to have narrowed the price spread between Manitoba and Chicago almost to zero. This may be an early price signal that Manitoba Corn will attempt to capture more acres in 2012. Chart analysis and commentary by Harold AGJ Davis Oats: The bears are running out of time   Chicago players using downtrend following trading systems still seem to be employing bearish strategies long after the Basis relationship in the cash Oat market has turned bullish. Perhaps the Oats bears were waiting to buy-back their short positions during March’s seasonal weakness when Oat growers typically do some marketing to pay for inputs, but this is a dangerous game. Other markets, see our Wheat comments, are already turning up and, if the bears miss their exit opportunity, the April to June seasonal strength could be an educational experience. Chart analysis and commentary by Harold AGJ Davis Oats: Trend changes in the works   In recent days, Chicago Oat futures prices expressed in Canadian dollars have scored two important chart developments indicating that the big year long downtrends  may soon be over. Note how close the average delivered elevator price of Saskatchewan Oats is to its trend!   The easiest change to see was a break in the smaller more rapid downtrend in Oat futures prices that has prevailed since harvest. This break suggests expectations about crop marketing pushing prices inevitably lower are finished. Perhaps the futures market finally noticed that Saskatchewan Oat average elevator prices were not nearly as weak during this period, and futures got nervous.   The other broken futures market feature is a large momentum curve that has acted like an internal backbone for the last year and a half. Now that prices have broken above this spine, it could be an early indication that the dynamics of the Oat market are on the verge of something completely new. Chart analysis and commentary by Harold AGJ Davis Feed Wheat: No longer cheap   Since last summer, average delivered elevator prices for Feed Wheat in Saskatchewan have held fairly steady while Minneapolis milling grade futures have been more volatile.    These days, Feed Wheat is trading at 64% of the Canadian dollar value of MGE Futures. This value ratio tends to trade nicely around its 56% average and should not be ignored just because it compares feed to milling grade. Feed Wheat’s comparatively “rich” pricing might mean that near term price risks are asymmetric or lopsided.   MGE Futures have arrived at an important “make or break” point hemmed in between support represented by a rising bottoms line and a near term downtrend. One chart feature or the other will win out and set the tone in milling wheat for months to come. If Minneapolis rallies, then Feed Wheat could tag along. However, if Minneapolis retreats, Feed Wheat’s “rich” pricing may mean that it has more to lose.    Watch these markets carefully in the days ahead. Chart analysis and commentary by Harold AGJ Davis Feed Barley: Corn could fuel a surprise   The Alberta average elevator price for Feed Barley continues to trade quietly sideways. In fact Alberta Barley is roughly the same price that it was back in May 2011. In contrast, Corn futures expressed in Canadian dollars are well down from last May’s levels. Is this a risk?   Some might worry that this relative performance difference could make Feed Barley vulnerable. However, on the basis of the historical value ratio, Feed Barley pricing has simply gone from ultra cheap levels to now be a comparative bargain. Moreover, Feed Barley’s current value will allow it to participate in any Corn strength.   Corn futures continue to trade upon support at the CDN$6/bu level and are now testing their third potential downtrend line.  These three downtrends could be a potentially bullish phenomenon known as “fan lines” whereby a break above the last one could trigger a rally up towards the old highs.   This means that Corn deserves close scrutiny and, if it goes, Alberta Feed Barley could be pulled along.