Market analyst Mike Jubinville concedes his market expectations have fallen from the heady highs of 18 months ago. But while he doesn’t see a return to those levels any time soon, he doesn’t believe commodity prices will fall through the floor either
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Wedged firmly between the bulls and the bears, Jubinville is predicting prices will follow a sideways trend for much of 2010.
 

Higher supplies of key commodities, in fact a U.S. corn crop that unexpectedly broke the previous record, and growing stocks of wheat, are curbing upward market movement. “I still believe, fundamentally speaking, that $9 canola is probably about as high as the market needs to go.”
 

Meanwhile, continued demand from Asia, the ethanol industry and robust speculative interest in commodities by non-traditional investors, are underpinning markets on the downside. 
 

Jubinville acknowledges the current market scenario is a far cry from the unprecedented prices farmers saw a few months back, but he said many of the fundamentals remain the same.
 

“A lot of the issues affecting the markets at that time are still underlying the markets today,” Jubinville said. The problem is, so are a lot of other political, macroeconomic and supply factors that are adding a bearish tone to trade. Trade disruptions due to the discovery of genetically modified flax in Canadian shipments and salmonella in canola meal is hampering trade, which also has an effect on prices, he noted. 
 

The U.S. dollar is struggling to hold its value, largely due to the huge injection of cash the U.S. Treasury pumped into the marketplace last year in a bid to prop up the financial system. Jubinville said analysts have determined the amount of greenbacks the U.S. printed and distributed is higher than all of the civil and off-shore wars that country has fought in since Independence.
 

As well, supplies have grown and the recession has limited demand growth in certain key markets.
 

Jubinville said farmers’ best selling opportunities could well be to watch for basis “carrots” companies offer when trying to draw stocks into the system. 
 

As well, he advised against farmers panicking and rushing into the market to sell of commodities such as oats at the first sign the market is falling. “Let’s not chase this thing down when it is testing its downside,” he said. “Now is not the time to go chasing the oat market.”