Commodities Report

May 26, 2015

 

Close May 26, 2015

May 12

2 week change

Dec Corn

3.73

3.76

- .03

Nov Soybeans

9.04

9.31

- .27

July Wheat

4.93

4.81

+ .12

June Hogs

83.35

85.00

- 1.65

June Cattle

151.75

151.60

+ .15

Cdn $

80.45

83.30

- 2.85

US $ Index

97.25

94.40

+ 2.85

Crude Oil

58.00

60.40

- 2.40

Gold

1187

1192

-5

US 10 Year Notes

127-29

126-29

+ 1-00

TSX Stocks

14991

15051

- 60


Grain prices were mixed over the past two weeks. Wheat was the strongest on too much rain in portions of the Southern Plains, especially Okla. This caused short-covering, as speculators were short a record number of wheat contracts. Soybeans fared the worst, as speculative funds sharply increased their short position in that commodity.

Planting of spring crops in North America proceeded at a near record pace. 92 percent of the corn and 61 percent of the soybeans were planted by May 24. 74 percent of the corn was said to be in good or excellent condition, a very high number for this time of the year.

Moisture is lacking primarily in the Northern Plains, including Minn., Dakotas and Wisconsin. In the eastern grain belt, Michigan is drying out the most. Most of Ontario is also unusually dry for this time of year.

There are reports of weed escapes in planted fields, as pre-emergent chemicals did not get completely activated by the required moisture. Frost did some isolated damage in some of the most advanced fields, especially in no till fields that had a lot of trash on top. Low lying areas also had more damage.

Midwest weather looks favorable for crop development over the next two weeks, with regular rainfall, and warm, but not hot, temperatures. This is obviously keeping a lid on prices. Also negative on the demand side is the 40 million feathered livestock that died from Avian flu in the US, mostly in Iowa.

The Canadian dollar dropped sharply over the past two weeks. Lower than expected inflation numbers convinced traders that the Bank of Canada would not raise interest rates in the foreseeable future. With a federal election coming this fall, the government knows it’s better for them to have a lower dollar than a higher one for economic growth reasons.

The dollar drop allowed corn basis to gain 12 cents and soybeans 40 cents on old crop and 30 on new since May 13. Wheat basis popped 20 cents. Our dollar shows strong support down near .80, so these basis gains may not hold. It appears there is still a lot of grain in farmers’ bins, especially corn.

Farmers have been reluctant sellers of new crop also, which isn’t surprising considering the recent drop in prices. Depending on land cost and obviously yield, current forward contract prices may be under the cost of production for some producers now. This is even more the case in South America, where input prices have soared because of their weak currencies.

The US dollar index turned strong again as the Euro weakened due to Greece debt repayment issues. The stronger US dollar was also a contributor to the lower commodity board, including crude oil and gold.  North American stock markets also lost some ground, despite better US labor and housing data.  

- Frank Backx, HDC Grain Marketer