Commodities Report

November 11, 2014

 

Close Nov 11

Oct 28

2 week change

Dec Corn

3.74

3.65

+ .09

Jan Soybeans

10.64

10.15

+ .49

Dec Wheat

5.24

5.32

- .08

Dec Hogs

89.90

90.05

- .15

Dec Cattle

167.25

167.75

- .50

Cdn $

88.26

89.24

- .98

US $ Index

87.49

85.33

+ 2.16

Crude Oil

77.50

81.03

- 3.53

Gold

1165

1229

- 64

US 10 Year Notes

126-06

127-00

-26

TSX Stocks

14764

14581

+ 183

 

Corn and soybeans did a little better, while wheat was a bit weaker over the past two weeks. As of Sunday, Nov 9, 80 percent of their corn and 90 percent of their soybeans were harvested. This is very close to normal for this time of year. 93 percent of their winter wheat was planted, with 83 percent emerged, slightly ahead of normal.

On Nov 10, USDA updated production and carry outs (CO) for the US and the world. The US corn yield was lowered slightly to 173.4 bu versus 174.2 predicted in Oct. Lower yields in Iowa and Minn. caused the drop. This allowed the CO to drop to 2.008, compared to 2.08 bln predicted last month and 1.236 bln last year.

The US soybean yield was raised .4 bu/ac to a new record of 47.5 bu. The increase in production was, however, totally offset by an increase in demand, resulting in no change in the CO at 450 mln bu.. This compares to 92 mln the previous crop year. The wheat CO was lowered a minor 10 mln bu to 644 mln.

The report was close to pre-report expectations, so no large moves ensued after the report. The markets quickly returned to watching South American (SA) weather maps. They showed wetness in Argentina, which was slowing planting progress. Meanwhile Brazil also received rain, which was actually beneficial to them, as they had been too dry, especially in Mato Grosso, the largest producing state.

SA farmers remain very slow sellers, as crop prices are well below where they have been the past 7 years. Meanwhile input prices, which had escalated sharply during the commodity boom, have retraced very little, squeezing margins for producers there. Their currencies are also under pressure, which further adds to the cost of their imported inputs such as fertilizer.

US corn export shipments are running 30 percent ahead of last year at this time. USDA is predicting exports will fall by nearly 9 percent. Soybeans are 14.6 percent ahead of a year ago, while USDA expects them up only 4.4 percent. Admittedly, US exports slow in the second half of the marketing year, when SA supplies hit the market, but upward revisions in exports are likely going forward.

Likely only 5-10 percent of Ontario soybeans still need to be cut, while 10 percent of the corn is harvested. Moisture is high in corn, resulting in low test weights. Fines are also an issue, as the corn falls apart after it is dried. The lower test weights will also result in lower yields than what they look like without weighing the corn.

Ontario wheat acres will be the lowest in decades due to a wet fall. This should strengthen wheat basis, in both old and new crop. Farmer selling is non-existent, with good reason, and end users will shortly try to buy any kind of ownership they can get their hands on. Our short crop will have no effect on Chicago, however.

Outside markets keep trending in the same directions, with crude oil, metals and currencies staying weak, (except the US dollar) and stock markets firming once again into new record highs. This proves once again that once a trend is in force it is hard to change, and price moves go further in both directions than what most people expect.  

- Frank Backx, HDC Grain Marketer