Commodities Report

October 13, 2015

 

Close Oct 13, 2015

Sept  29

2 week change

Dec Corn

3.85

3.89

- .04

Nov Soybeans

9.12

8.84

+ .28

Dec Wheat

5.19

5.04

+ .15

Dec Hogs

66.75

67.05

-.30

Dec Cattle

137.10

134.15

+ 2.95

Cdn $

76.87

74.43

+ 2.44

US $ Index

94.74

95.85

-1.11

Crude Oil

46.70

45.24

+ 1.46

Gold

1166

1128

+ 38

US 10 Year Notes

128-28

128-25

+ 03

TSX Stocks

13864

12997

+ 867

Grains were mixed again over the past 2 weeks. The weather news in North America was bearish, as harvest progressed rapidly. Planting conditions in South America were friendly to the soybean price, which broke over $9.00 for the first time in 2 months.  Meanwhile the highly anticipated USDA demand/supply report on Oct 9 showed no major surprises.

USDA put the corn yield at 168 bu/ac, compared to 167.5 estimated last month. Traders thought the yield would have been smaller. Acres were reduced 400,000. Demand items were left unchanged. The 2015/16 carryout (CO) was reduced to 1.561 bln bu, compared to 1.592 bln reported in Sept., and last year’s 1.731 bln.

The soybean yield was pegged at 47.2 bu/ac, compared to 47.1 predicted in Sept.  Acres were reduced a larger than anticipated 900,000. The CO was reduced to 425 mln bu versus 450 mln guessed last month, and 191 mln ending stocks for last year’s crop, so a sizable increase is still expected.

The biggest variances were in wheat. Acreage was reduced 1.5 mln, and the average yield was trimmed by a half a bu. However feed use was reduced 20 mln and exports 50 mln., so the CO only went down from 875 to 861 mln. There is no shortage of wheat in the US or the world, according to USDA.

Weather this fall has been conducive to a quick harvest pace, and is now well ahead of normal and last year in particular. Half the US corn and two thirds of the soybeans are already under cover. Ontario’s harvest is also progressing rapidly, as it has been an unusually warm and dry the past 6 weeks. Many combines are switching to corn, with moisture levels already in the 20’s.

Early planting of crops in South America  is being delayed. It is too wet in the south and getting dry in the north, including Mato Grosso, by far the largest producing state.  It is still very early for them, but it is  supporting the soybean price the past few trading days. Funds have started to buy futures again, as moving averages turn up.  S Amer  is overdue to have subpar yields, and with El Nino so strong, this could be the year.

Some think the slowing of the Chinese economy will result in reduced imports of foodstuffs. Food will absolutely be the last thing their government skimps on. They realize empty stomachs lead to discontented people and even revolution. They will not let this happen. China imported 78.3 mln mt soybeans in 2014/15 versus 70.4 the previous year, an 11 percent increase.  10 years ago it was only 28 mln mt.

The Canadian dollar gained over 3 cents in the past 2 weeks to its best level since July.  The main impetus was the crude oil market, which rallied back over $50 before profit-taking set in. There is strong resistance on our dollar’s weekly chart at .78, so that level may stop this short term rally.  

- Frank Backx, HDC Grain Marketer