Commodities Report

April 28, 2015

 

Close April 28

April 14

2 week change

Dec Corn

3.83

4.00

- .17

Nov Soybeans

9.54

9.48

+ .06

July Wheat

4.76

4.97

- .21

June Hogs

73.85

78.60

- 4.75

June Cattle

151.20

150.55

+ .65

Cdn $

83.07

80.03

+ 3.04

US $ Index

96.05

98.66

- 2.61

Crude Oil

57.09

53.47

+ 3.62

Gold

1212

1192

+ 20

US 10 Year Notes

128-29

129-17

- 20

TSX Stocks

15328

15361

+ 33

S & P 500

2105

2087

+ 18

 

Corn and wheat fell further, while soybeans gained over the past 2 weeks. This is mainly due to early spring weather. The Northern Plains have been unusually dry, so 55 percent of the spring wheat is already planted; normally it is 29.  As of Sun. April 26, 19 % of the corn was in, usually they are at 25. Excellent progress is expected for this week, however, which pressured corn.

Perhaps corn acres will not fall as much as was predicted in the March 31 report, which obviously means there would be less bean acres. Meanwhile, there were reports China will reduce their bean acres by 15 percent, relying even more on the Americas to fill their needs. Stats Canada expects more corn acres and less soybeans in 2015.

Fund selling has been the largest contributor to the price declines, as speculators have been consistent sellers since the start of 2015. They are now short 65,000 corn contracts; they were long 230,000 late in 2014. They are now short a record 100,000 wheat contracts, or 500 million bu., which is more soft red wheat than the US will grow this year!

Soybeans have remained resilient, despite the fact specs are now short 80,000 soybean contracts also, their largest short position in decades. When so many are leaning that way, it becomes more likely prices will work higher from current levels. A short covering rally is inevitable, but the timing is uncertain.

A small planting window seems to be opening up for Ontario grain farmers over the next 5 days, although night time temperatures will dip below what would be ideal. Current forecasts look wetter after that. Hopefully spring weather will be better than it has been the past two years.

The Canadian dollar strengthened further on the back of the stronger crude oil market. The result has been a $.15, .30 and .20 drop in new crop corn, soybean and wheat basis respectively, in the past two weeks alone.  The grains act instantly to currency changes, and unfortunately, the input side is much slower to react to the same exchange rate changes.

The US dollar index lost some ground after its spectacular rise over the past year. US economic numbers are coming in softer than expected lately, but at least part of that was due to the extreme cold in the eastern half of the US so far this year. A weaker US dollar should be price friendly to commodities generally.

Uncertainty prevails in Europe, especially surrounding Greece. Despite that, many international stock markets, including Japans, hit multi-decade highs. Investor dollars still seem very willing to buy stocks and bonds. US 10 year Treasuries are yielding a paltry 1.9 percent.  Meanwhile, dollars keep leaving exchange traded commodity funds, due to recent poor returns there.  

- Frank Backx, HDC Grain Marketer