Commodities Report

June 11, 2014

 

Close June 11

May 28

2 week change

July Corn

4.41

4.73

-.32

Dec Corn

4.42

4.70

-.28

July Soybeans

14.45

14.98

-.53

Nov Soybeans

12.22

12.43

-.21

July Wheat

5.89

6.39

-.50

June Hogs

115.45

115.00

+.45

June Cattle

143.15

136.45

+6.70

Cdn $

92.01

91.90

+.11

US $ Index

80.79

80.62

+.17

Crude Oil

104.39

102.72

+1.67

Gold

1261

1259

+2

US 10 Year Notes

124-05

126-16

-2-11

TSX Stocks

14861

14611

+250


Grains continued their seasonal decline over the past 2 weeks, on favorable weather for planting and growth over most of the US. As of Sun., June 8, 75 percent of their corn and 74 percent of their soybeans were deemed to be in the good and excellent categories. This implies above average yields, at least to this point in time.

It is not surprising that soybeans dropped more than corn and wheat, considering their relative prices. Not only have North American farmers responded to the price signals, but so have South American farmers. This will, over time, get the price ratios to more normal levels.

Forecasts have turned wetter of late, and while rain makes grain in most traders’ minds, farmers know that excess moisture can zap yield just as much as drought, especially early in the growing season. This needs watching and could become more of a factor should it turn hot or dry in July or August.

On June 11, USDA issued new demand/supply reports. There were no major surprises versus traders’ expectations, but prices sold off further nonetheless. It isn’t very bullish when the 2014 carryout on corn is expected to go to 1.726 bln bu from 1.146 bln, while soybeans will soar to 325 mln bu from 125 mln.

The most bearish news recently was word that China rejected some US origin DDG’s, and hinted they will not issue import permits to bring in more. They have been buying over 500,000 mt per month. I believe this could just be a tactic to source cheaper product, as they still need feed and protein. Only time will tell.

Most of Ontario has encountered one of its toughest springs in years. Early planting was delayed due to excess moisture. Now a rain is needed soon to germinate the newly planted seeds and get things growing normally, as a lot of crop went in under less than ideal conditions.  With Chicago in the tank, incomes could take a larger than expected hit, although new crop bean prices remain decent.

Outside markets were mostly better, led by new highs in some stock markets and cattle. Crude rallied on further tension in the Mideast. Likely due to the slowly improving commodity markets (excluding grains), the Canadian dollar is looking stronger technically. This is the last thing Canadian agriculture needs right now.  

- Frank Backx, HDC Forest Location Manager