Commodities Report

February 28, 2017

 

Close Tues Feb 28

Feb 14

2 week change

Dec Corn

3.94

4.00

- .06

Nov Soybeans

10.18

10.23

- .05

July Wheat

4.59

4.76

- .17

June Hogs

77.65

79.50

- 1.85

June Cattle

107.55

104.65

+ 2.90

Cdn $

75.23

76.60

- 1.37

US $ Index

100.95

100.71

+ .24

Crude Oil

53.95

53.30

+ .65

Gold

1252

1224

+ 28

US 10 Year Notes

125-05

124-07

+ 30

TSX Stocks

15441

15794

-353

 

Crop prices were a bit weaker compared to 2 weeks ago, but were a marginally firmer compared to where they were at the start of February.  Trends are mostly sideways for all the grains, but prices remain well above the lows hit early last fall. Grains usually bottom at that time of the year when crops are large.

Each February, USDA releases their longer term outlook for acres and prices. They’re projecting a 4 million drop in corn acres to 90 mln from 94 mln. Soybean acres are expected to rise to a new record 88 mln, compared to 83.4 mln last year. US wheat acres are also expected to drop sharply, continuing their long term down trend.

Corn prices briefly shot up 18 cents and soybeans 33 cents on Feb. 28, when there were rumors Trump was going to move the point of obligation from the refiners to the fuel terminals for biofuels and increase the ethanol mandate from 10 to 15 percent. Prices backed off, when it was ruled he couldn’t do this unilaterally. The news is still positive, as some thought he might cut the mandate.

It is staying very wet in Mato Grosso, slowing harvest and preventing the planting of double crop corn. More rain is in the forecast for at least the next 10 days. This could be price supportive. It sure was last year at this time, as prices rose sharply from March until June.

North American weather will soon become the focus of traders. To say it has been erratic would be an understatement. There has been near record snow and rain on the east and west coasts of North America, while the mid-section has had one of its warmest winters ever. It seems extremes are now the norm.

 The Canadian dollar has traded between $.74 and .80 in the past year. It is now getting closer to a down side breakout of the trading range. I suspect it should hold above the lows, especially if stronger commodities in general can give it some tail winds. Metals and energies both gained over the past 2 weeks and for February.

Longer term interest rates are easing somewhat again. This is surprising considering President Trump is proposing massive defence and infrastructure spending and cutting taxes significantly. However, as with the ethanol deal mentioned above, he will not be allowed to do exactly as he pleases. There is definitely a higher level of uncertainty in US politics and economics.

This will likely mean more volatility in all markets, including grains.  

 

- Frank Backx, HDC Grain Marketer