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Wheat Slumps As CN Rail Reaches Tentative Agreement With Union

November 26, 2019 at 15:35 by Andrew Moran

Wheat futures are retreating from one-month highs on Tuesday after it was announced that the union representing Canadian National Railway reached a tentative agreement with the company. The week-long strike has impacted many of Canada’s key exports, including crude oil and wheat. There were concerns that the disruption would hurt Canadian farmers and trim economic growth numbers.

December wheat futures tumbled $0.0575, or 1.08%, to $5.2725 per bushel at 14:31 GMT on Tuesday on the Chicago Board of Trade (CBoT). Wheat prices have gained 11% since August and 5% year-to-date.

Teamsters Canada confirmed that it reached a tentative deal with CN Rail to renew the collective agreement with 3,200 conductors, trainpersons, and yard workers. The details of the deal have yet to be disclosed, but the union did say that normal operations would resume on Wednesday morning across the country.

The agreement must be ratified by union members.

Francois Laporte, Teamsters Canada president, thanked the federal government for not intervening in the matter. In recent days, many public officials and business leaders had pushed Prime Minister Justin Trudeau and his minority government to resolve the issue through swift mediation, binding arbitration, or back-to-work legislation. But the government resisted.

Previous governments routinely violated workers’ right to strike when it came to the rail industry. This government remained calm and focused on helping parties reach an agreement, and it worked.

The wheat market had recently been driven by wet weather in Europe, rising cash values for US and Russian inventories, and a decline in US acreage. Also, in global financial markets, hedge funds and money managers had been covering their shorts.

According to the US Department of Agriculture (USDA), 52% of the American winter wheat crop was rated good to excellent, unchanged from the previous week. The market had penciled in a decline of 1%.

In other agricultural markets, December corn futures fell $0.02, or 0.53%, to $3.7875 per pound. December soybean futures plunged $0.085, or 0.95%, to $8.84 per bushel. January orange juice futures edged up $0.005, or 0.55%, to $1.001 per pound.

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