Canada Markets

Price probability is just one of six studies that are fed into the mix to create DTN's 6-factors approach that is used to make marketing decisions, although it is interesting to occasionally break them out individually to get a feel for how the current market stacks up against markets of the past.

As seen in the attached chart, the red bar, which marks the December MGEX red spring wheat future as of September 6 when this chart was printed, is in the middle of the five-year price distribution. As seen on the vertical axis, the 50% that marks the height of the red bar suggests that over the past five years, prices have been lower than the current price of $7.13 per bushel 50% of the time, while prices have been higher than $7.13 50% of the time. To summarize, each bar on the chart indicates the percentage of time that prices have traded higher in the past five years.

The blue bar, shown at $8.20/bu, marks the price level where prices have traded higher one-third of the time. This has significance for those marketing strategies that target to sell in the top one-third of price ranges available, in this case, over the past five years. In a strategy such as this, a selling opportunity is indicated when the red bar moves to the right of the blue bar, or in other words, into the top one-third of the five-year price range.

For those eastern growers producing soft red winter wheat, the five-year price probability chart (not shown) indicates Friday's closing price at $6.48/bu remains just below the $6.60/bu price level which indicates the price level where prices have been higher one-third of the time over the past five years.

Also not shown, the canola five-year price probability chart indicates Friday's nearby November price, at $498.20/mt, has been exceeded approximately 42% of the time over the past five years. The top one-third of the five year price-distribution is indicated on the chart to be prices reached above $535/mt.

Friday's close of $4.68 1/4 in the corn market is squarely in the middle one-third of prices achieved over the past five years, with the highest one-third of the price-range marked by prices ranging from $6.11/bu to $8.10/bu.

Friday's close of $13.67 3/4/bu for November soybean prices is currently indicating a selling opportunity for those whose strategy it is to sell in the top one-third of the available price range. The current chart (not shown) indicates that prices have only been higher than the current price approximately 25% of the time over the past five years. A price of $13.31/bu or higher marks the range of prices which would reflect the top one-third of the trading range. In this particular chart, the red bar appears to the right of the blue bar and should make sellers take note of the current opportunity.

Once again, this analysis plays a partial role within DTN's market analysis although is not designed to make isolated marketing decisions.

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Cliff Jamieson can be reached at cliff.jamieson@telventdtn.com

(ES)

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