Commodities Report

March 31, 2015

 

Close March 31

March 10

3 week change

May Corn

3.76

3.88

- .12

May Soybeans

9.73

9.84

- .11

May Wheat

5.13

4.94

+ .19

April Hogs

62.10

65.20

- 3.10

April Cattle

162.00

154.10

+ 7.90

Cdn $

78.95

78.97

- .02

US $ Index

98.45

98.45

0

Crude Oil

48.03

49.33

- 1.30

Gold

1187

1163

+ 24

US 10 Year Notes

128-29

126-28

+ 2-01

TSX Stocks

14917

14698

+ 219

S & P 500

2070

2057

+ 13

It has been 3 weeks since my last report, and most markets did not show a lot of change. Wheat was the best performing grain, as dryness persists in the US hard wheat areas of Kansas and Okla. The Russian winter cereal crops are also subpar. Soybeans and corn were weaker, anticipating the USDA acreage report, which was released on March 31. 

USDA thinks total acres planted to the major crops will be 2.6 mln less than 2014, as some of the marginal land in the fringe areas that responded to the high prices over the past 5 years goes unplanted. As can be seen from the above chart, soybean acres are 1.4 mln less than expected, but still up 900,000 from last year to a new record. Corn acres were put at 300,000 above expectations, but 1.4 mln less than 2014.

Corn stocks at Mar 1, half way through the marketing year, were 136 mln more than expected, while soybean stocks were in line with guesses. Both are up sharply from a year ago. There were no surprises in the wheat numbers. The higher corn stocks were the main negative in the report, with corn dropping 18 cents right after the report.

Corn planting has been very slow in the US south, however. Texas is at 20 %, normal is 43, Louisiana is at 16 vs 81, Missouri 4 vs 39 and Arizona 2 vs 28. After Apr 15, farmers there are likely to switch acres to soybeans or cotton. This could be a positive for old crop corn late this summer if early planted acres don’t get sown.

In mid-June 2014, it took 2.19 Brazilian reals to buy 1 US dollar. Today it takes 3.19. That’s a depreciation of over 47 percent. That is a double edged sword for them. Their grain basis has appreciated dramatically, but input costs are also increasing significantly. Their socialistic economy is hurting badly, as the economy slides into recession while price inflation is on the rise.

The Canadian dollar lost a bit of ground, as the Bank of Canada expects a very poor number for recent economic growth, due to weak crude oil and very cold weather in Eastern Canada. Basis levels for Ontario grains should be well supported, especially in corn and wheat.

It looks like no early spring is in the cards for Ontario, if current forecasts for April are accurate. It is too early to tell how the late fall planted wheat will fare when temperatures warm up. It has been unusual with such cold temperatures in the eastern half of the country, while it has been so warm in the western half.

 

Outside markets were relatively stagnant as well, as the US dollar index held on to its recent strong gains. Bonds gained a couple points, as deflation is aided by the continued weakness in crude oil prices. Interest rates are unlikely to move anywhere in the next few months. Stock markets gained marginally over the past 3 weeks in volatile trade. 

- Frank Backx, HDC Grain Marketer