Commodities Report

May 17, 2016

 

Close May 17

May 10

2 week change

Dec Corn

4.04

3.88

+ .16

Nov Soybeans

10.67

10.68

- .01

July Wheat

4.82

4.61

+ .21

June Hogs

82.60

80.80

+ 1.80

June cattle

123.55

123.30

+ .25

Cdn $

77.46

77.36

+ .10

US $ Index

94.53

94.25

+ .28

Crude Oil

48.66

44.45

+ 4.21

Gold

1278

1267

+ 11

US 10 Year Notes

130-16

130-27

- 11

TSX Stocks

13927

13772

+155

I have switched the comparison chart to the new crop futures, since most farmers are sold out on their old crop supplies. There were a lot of plus signs in commodities over the past week.

 Corn and wheat finally improved marginally, while soybeans retreated moderately over the past week. This was expected considering corn and wheat did not participate in the huge run-up that soybeans experienced since March 2. November soybean futures rallied $2.12 per bushel in that 2 ½ month window, while corn and wheat only gained about 35 cents each.

It is interesting that soybean futures haven’t taken out the high it hit the day of the USDA report (May 10) when prices rocketed higher by 50 cents. However, prices remain resilient and there seems to be good support under the market. Speculative funds remain solid buyers of soybean futures.

It is expected US farmers will switch 1 to 3 million acres of intended corn acres to soybeans because of soybeans strong performance. There will likely be some switching in Ontario also. New crop soybeans delivered to the elevator hit $13.00, while harvest corn is $4.70, putting the soybean/corn ratio at 2.76. This does not take into account any premiums that exist on edible soybeans.

USDA reported that 75 percent of US corn was planted as of May 15. Normally it is 70 percent on that date. Soybeans are 36 percent planted, versus 32 average for May 15, so overall, planting is slightly ahead of normal.  62 percent of US wheat is rated good or excellent, well ahead of last year’s 45 percent.

Corn futures are nearing the psychological $4.00 mark again. A close over that level would likely cause more fund buying. The second corn crop in Brazil is still suffering from drought, causing prices to skyrocket there. Rumors are they may not be able to meet all their export commitments. US export sales have been very strong lately.

Crude oil rallied nearly 10 percent in the past week, but the Canadian dollar didn’t follow suit for a change. Despite that, basis levels on all grains gained 5 to 10 cents over the past week. There is strong demand from US sources for Ontario grains right now.

Planting progress in Ontario is highly variable, with more planting to the north and on lighter soils. The 2 week forecast, if accurate, should give farmers an opportunity to get caught up. Prices are doing much better than what anyone predicted. Selling an increment at current levels should be profitable for most farmers.  

 

- Frank Backx, HDC Grain Marketer