Commodities Report

September 29, 2015

 

Close Sept 29, 2015

Sept  14

2 week change

Dec Corn

3.89

3.90

- .01

Nov Soybeans

8.84

8.95

- .11

Dec Wheat

5.04

4.95

+ .09

Oct Hogs

73.30

66.95

-+ 6.35

Oct Cattle

129.20

141.25

- 12.05

Cdn $

74.43

75.41

- .98

US $ Index

95.85

95.60

+ .25

Crude Oil

45.24

44.60

+ .64

Gold

1128

1107

+ 21

US 10 Year Notes

128-25

127-18

+ 1.07

TSX Stocks

12997

13419

- 422

 

Grains were mixed compared to two weeks ago. The US Midwest had one of its warmest Septembers ever, which helped crops race to maturity, and enabled rapid harvest progress. As of Sept. 27, 18 percent of US corn and 21 percent of their soybeans were harvested. This is well behind last year’s pace, but not far from average for this time of year.

Yield reports are highly variable in the Midwest. As expected, the areas that received the heaviest rainfall in the spring are faring the worst. The variability makes it harder to try to determine an average yield. USDA will take another stab at it on Oct. 9. In the analog wet year of 1993, the market gained sharply after the Oct report.

The conditions in the US Midwest were very similar in Ontario. A lot of soybeans are already in the bin, and some corn has already been combined by livestock farmers who need feed and cash croppers trying to capture the early shipment premium, which is fading fast. Last year, harvest didn’t even begin until after Thanksgiving.

China’s pace of buying US new crop soybeans was only half of what it was the past few years, but they have stepped up and bought significant quantities in the past two weeks. No doubt there will be significant competition from South America this whole crop year. Record crops are being predicted there, even though they are just beginning to plant.

The strong US dollar in the past 1 ½ years is hurting US export sales of grains also. Wheat exports, 16 weeks into the marketing year, are the lowest in 6 years. Corn is only 3 weeks into the new marketing year, but, so far, sales are the slowest in 10 years, and down 30 percent from a year ago.

There has been a huge divergence in livestock markets. Last Nov, live cattle hit their all-time high at $171.65/cwt.. It closed limit down today at under $130, for a drop of over 25 percent. Hogs bottomed at 57.80 in late March, 2015 and have gained over 25 percent since to 72.50 now. Each meat is marching to the beat of its own drummer more than ever.  

The Canadian dollar made new 11 year lows again, despite energy and metals markets having a dead cat bounce. This is keeping basis levels on meats and grains firm, helping Ontario farmers absorb the general downward Chicago action.

Stock markets were weaker while bond prices firmed. It appears more and more likely that the US will raise interest rates in December. Financial markets are on edge, as rumors proliferate that some of the largest banks in the European Union are struggling. Meanwhile, news on the Chinese economy remains mostly negative.  

 

- Frank Backx, HDC Grain Marketer