Commodities Report

May 28, 2014

 

Close May 28

May 14

2 week change

July Corn

4.73

4.96

- .23

Dec Corn

4.70

4.89

- .19

July Soybeans

14.98

14.86

+ .12

Nov Soybeans

12.43

12.23

+ .20

July Wheat

6.39

6.91

- .52

June Hogs

115.00

120.65

- 5.65

June Cattle

136.45

137.50

- 1.05

Can $

91.90

91.87

+ .03

US $ Index

80.62

80.13

+ .49

Crude Oil

102.72

102.48

+ .24

Gold

1259

1305

- 46

US 10 Year Notes

126-16

125-19

+ 29

TSX Stocks

14611

14696

- 85


Corn and wheat were sharply lower, while soybeans maintained their relative strength. China’s insatiable appetite for vegetable protein is the main supporting influence in soybeans. Record harvests in Brazil and Argentina and record acres in North America, along with mostly favorable weather so far this spring, are obviously in the background for now.

AS of Sun May 25, 88 percent of US corn was planted, with 60 percent emerged. Soys were 59 percent planted and 25 percent emerged. All of these are close to the average for this time of year. The current two week forecasts show warm and damp, which would be ideal for the newly planted seeds.

Unfortunately, farmers in most of Ontario are experiencing one of their slowest planting seasons in a long time, due to persistent rains. It gets close to being fit to plant just before the next rain event. Many farmers have very little corn planted, and with the calendar staring at June, some switching to soybeans is likely, especially since locally it takes 2.83 bushels of corn to equal 1 bushel of soybeans.

Wheat took the largest drop, even though the US winter wheat crop has its worst ratings in 28 years. The funds are fickle, and, as a percentage of the crop, have a larger influence on wheat than they do on corn or soybeans. Their swings from short to long and back in the past year are unprecedented. Fundamentals don’t seem to matter a whole lot.

Funds were short 180,000 contracts of corn last fall, and supported prices by buying over 450,000 contracts, to be long 275,000 contracts until they started selling again recently. The correlation between fund activity and price seems to be getting stronger. Now that trends have turned down, more selling becomes likely.

With the generally adequate to surplus moisture levels in the US this spring, root systems aren’t likely to be overly developed. This could amplify the effects of any extended hot dry weather later this summer. El Nino is again forming in the Pacific Ocean off South America, but even scientists can’t agree what affect this might have on US or world crops.

Outside markets were relatively quiet, with the US dollar a bit firmer and gold weaker. Crude oil, stock and bond markets and the Canadian dollar were all little changed. Ontario basis levels were mixed, as corn rose with the Chicago drop, while soybean basis dropped, anticipating more soybean acres in Ontario due to the late planting season. 

 

- Frank Backx, HDC Forest Location Manager