Commodities Report

August 12, 2014

 

Close Aug 12

July 29

2 week change

Sep Corn

3.59

3.62

.03

Dec Corn

3.69

3.71

-.02

Sep Soybeans

11.01

11.21

-.20

Nov Soybeans

10.60

10.96

- .36

Sept Wheat

5.38

5.20

+ .18

Live Hogs

97.20

105.85

- 8.65

Live Cattle

147.70

159.15

- 11.45

Cdn $

91.44

92.05

- .61

US$ Index

81.53

81.21

+ .32

Crude Oil

97.35

100.61

- 3.26

Gold

1309

1298

+ 11

10 Year Notes

125-28

125-09

+ 19

TSX Stocks

15258

15492

- 234

In their first surveyed yield estimate, USDA put corn at a record  167.4 bu/ac, up 2.1 from July, but less than the 170.1 expected. Usage was raised 100 mln bu..The carryout (CO) was left virtually unchanged at  1.81 bln vs 1.80 estimated last month. Traders expected 2.03 bln., so a bit friendly for price.

The soybean yield will also be a record, at 45.4 bu, compared to 45.2 guessed last month. The CO will then swell to 430 mln bu., up 15 mln from last month  and compared to the140 mln. for last year’s crop. Usage was left unchanged.

Wheat fundamentals were left pretty much unchanged. CO will rise marginally to 663 mln bu. compared to 660 predicted last month and 590 mln last year. Over 31 percent of next year’s usage will need to be carried forward to the 2015/16 crop year, if USDA is right.

The market’s overall reaction was muted, as CO’s are rising on all field crops. The US and world supplies will easily satisfy what is still a growing demand. Some experts are downgrading the China corn crop, however, but USDA left it unchanged at 222 mlm mt.

US weather has remained non-threatening all year, with no extreme heat and mostly adequate moisture. Combined with timely planting, the US crop is racing towards maturity. Corn there is 11 percent dented, last year it was 16 for this date. 72 percent of soybeans are setting pods compared to 65 last year.

73 percent of US corn is rated good or excellent, while 70 percent of soys are in those categories. Last year they were both at 64 percent. Chances of a weather rally are dwindling by the day, as forecasts remain benign. The biggest threat now would be an early frost.

Ontario was not able to plant as early as normal due to a wet spring. Temperatures have been cool all summer, especially night time temperatures. Many corn fields are 2 weeks behind in development, so more heat would be welcome. No big warmup is expected. Moisture levels have been adequate to surplus all year.

Basis levels on old crop corn and wheat firmed nicely over the past 2 weeks, as short term demand easily outstripped farmer selling. New crop corn and soybean basis didn’t participate, however, as Ontario crops look good to excellent in most areas.

The major bull market in livestock got derailed when Russia announced they were banning pork imports from Canada in retaliation for the sanctions Canada put on them. It is sad when politics gets in the way of feeding the world and good business, but some things will never change, it seems.

Hotspots around the globe continue to flare up, mainly in the Middle East and between Ukraine and Russia. Markets are taking a wait and see attitude, as crude oil was weaker, while gold rose. The US dollar, which thrives on uncertainty and chaos, is at its best level since last September. A stronger US dollar is usually negative to commodities.

- Frank Backx, HDC Forest Location Manager