Commodities Report

February 19, 2014

 

Close Feb 19

Feb 5

2 week change

March Corn

4.54

4.43

+ 11

March Soybeans

13.54

13.16

+ 38

March Wheat

6.20

5.88

+ 32

June Hogs

107.60

105.40

+ 2.20

June Cattle

131.10

133.05

+ 1.95

Cdn $

90.16

90.24

- .08

US $ Index

80.21

81.13

- .92

Crude Oil

102.94

97.37

+ 5.57

Gold

1310

1261

+ 49

US 10 Year Notes

125-25

126-00

-7

TSX Stocks

14120

13497

+ 623

Crop prices were all firmer over the past 2 weeks. Most of the gains were weather related , but the latest monthly USDA report was also supportive on the demand side.

South Brazil has turned very dry of late, taking the top end off their soybean yields. A record crop is still expected due to record acreage, but some estimate 5 percent of the S Amer crop, or 7 mln mt., may have vanished.

US winter wheat prospects are also going downhill, as yet another cold front will park itself over the major wheat areas over the next 2 weeks. The change in fundamentals is causing large speculators to cover their record short position in that commodity.

USDA surprised the market by raising US corn exports by 150 mln bu., which they took right to the carryout, CO, lowering it to 1.481 bln bu from 1.631 predicted in Jan. This is the second large drop in the  CO in 2 months, but is still well above the drought related CO of 821 mln for the previous crop year.

The wheat CO was also dropped from 608 mln bu to 558 mln., on increased demand. There were no large changes in world stocks or in South American production. However, in view of the recent weather, reductions are likely for the March report.

Soybeans are also closely watching US export sales, which are already 105 percent of USDA’s projection for the year. Some think China will cancel orders, and switch them to S Amer origin. However, last year’s logistical nightmare there will still be fresh in their minds, so maybe no cancellations will take place.

The grain markets will soon turn their attention to N Amer spring weather. Long range forecasts continue to show cold and wet. It seems weather is getting more extreme, with the record flooding in England and record drought in California as the latest evidence.

The Canadian dollar fell over a cent today, making the recent 2 cent rally look more like a minor short covering rally than a change in its current downtrend. The higher metal and energy prices are in the background as traders focus on the poor performance of our economy, especially when compared to the US.

Crude rallied over 5.00 per barrel on the coldest winter in North America In a long time. Natural gas suddenly sits at a 6 year high, although that surge may be short lived, as production will overwhelm demand for the foreseeable future in the US with the fracking in the Marcellus Shale in the eastern US.

Livestock markets remain firm, mainly on the PED news. It will take until the end of the year before North America will get back to the hog numbers that existed before the outbreak. Meat prices should remain firm for the balance of 2014. 

 

- Frank Backx, HDC Forest Location Manager