Commodities Report

Dec 11, 2013

 

Close Dec 11

Nov 27

2 week change

March Corn

4.39

4.27

+.12

Jan Soybeans

13.44

13.20

+.24

March Wheat

6.41

6.64

-.23

Feb Hogs

87.85

90.50

-2.65

Feb Cattle

132.55

134.45

-1.90

Cdn $

94.05

94.30

-.25

US $ Index

79.87

80.77

-.90

Crude Oil

98.65

92.00

+6.65

Gold

1261

1241

+20

US 10 Yr Notes

124-24

126-18

-1-26

TSX Stocks

13139

13375

-236

 

It was another two weeks of mixed, choppy trade. Wheat was the weak link, mainly on the huge production increase Stats Canada threw at the market last week. They put the Canadian wheat crop at 37.53 mmt, up 38 percent from 2012, and 3 to 4 mmt more than expected.

The other big news in this usually quiet time of year for grain markets was the USDA report released Dec 10. The surprisingly large Canadian wheat production numbers affected world numbers, causing an 11 cent drop in Chicago futures after the report, as world ending stocks were raised the same amount as the increase in Canadian supplies.

The US soybean carryout (CO) was lowered 20 mln bu to 150 mln., in line with expectations. At the end of the previous crop year they were 141 mln bu. Imports were raised 10 mln., crush was up 5 mln and exports increased 25 mln bu. The projected producer prices were raised $.45 per bu.  

The US corn CO was trimmed 95 mln bu from the previous estimate to 1.792 bln bu, versus 824 mln last year. Corn for ethanol was raised 50 mln bu., and exports were raised the same amount.  The final crop estimates come out on Jan 10, 2014, and that report always causes fireworks.

In world numbers, Brazil’s soy crop was left unchanged at 88 mln mt, while Argentina’s was raised 1 mln mt to 54.5 mln. Their corn estimates were left alone at 70 and 26 mln mt respectively. World corn and soybean CO’s were only tweaked in a minor way.

Farmers on both sides of the border continue to be tight holders of corn. This is the main reason basis strengthened through harvest. Some anticipate a bout of farmer selling after Jan 1, when a new tax year begins for most farmers. Only time will tell if that will be the case.

In the US, ethanol producers are being forced to raise their bids to get ownership. ADM there is offering free deferred pricing, essentially offering free storage until the end of August to producers who sign up for the program. This is a rare occurrence in a large crop year.

Energy markets were all firmer, as winter moved in early over most of North America. Natural gas, while still cheap, has rallied 23 percent since the first of November, while crude is up 7 percent in the past two weeks. Stronger outside commodities generally help grain prices.

US economic numbers continue to surprise positively, especially on the labor front, with their unemployment rate at 7 percent, the lowest since 2008. Canadian growth lags, keeping a lid on our stock markets, despite the stronger energy and metal markets.

I wish my readers a blessed Christmas and good health and prosperity for 2014. 

- Frank Backx, HDC Forest Location Manager