Commodities Report

May 23, 2017

 

Close May 23

May 9

2 week change

Dec Corn

3.89

3.85

+ .04

Nov Soybeans

9.50

9.68

- .18

July Wheat

4.30

4.30

+ .02

June Hogs

80.25

77.40

+ 2.85

June Cattle

122.90

125.00

- 2.10

Cdn $

74.07

72.93

+ 1.14

US $ Index

97.27

99.98

- 2.71

Crude Oil

51.50

46.02

+ 5.48

Gold

1254

1222

+ 32

US 10 Year Notes

125-30

124-30

+ 1-00

TSX Stocks

15488

15556

- 68

Soybeans were lower compared to two weeks ago, while corn and wheat showed little change. US planting progress was very close to normal as of May 21, with 84 percent of the corn in the ground and 53 percent of the soybeans. The drought monitor index shows no shortage of moisture anywhere in the main grain growing areas.

Rain makes grain is an old saying with regards to crop prices. It is usually accurate. However, too much rain can also cause reduced yields, especially early in the growing season. There are some issues in key areas of the Midwest, where rains were two to three times normal, and some replanting will need to be done in those areas.

Temperatures so far this spring have been below normal, and that is expected to continue over the next two weeks in most of the Midwest. The longer range forecasts show mostly normal temps and precip for North American growing areas through the summer.  However, anything more than a few days out seems to be unpredictable.

Soybeans had a 22 cent drop on May 18, when their Brazil’s President was accused of accepting bribes. This caused their currency, the Real, to drop over 7 percent. This was a windfall for their soybean and corn producers, as their basis took a big jump. Brazil farmers sold a lot of crop that day, depressing Chicago prices.

South America is enjoying record yields again, so there will be stiff competition for exports. China’s spring weather hasn’t been perfect, and they are overdue to have a weather related setback in production. The Chinese government will make absolutely sure that there are no shortages of food in their country.

Livestock prices were mixed, with cattle softer and hogs firmer. Meat prices are nicely off their April lows. The generally weaker Canadian dollar has also helped incomes in that sector. China has started importing US beef again for the first time in a long time.

The US dollar index is trading at a 6 month low. This is usually friendly to commodities in general, but weather is the markets focus in the grains. Crude oil and gold showed decent gains however. Stock markets remain very resilient as investors still go there because interest rates remain depressed.

The Canadian dollar rallied over the past 2 weeks on the weaker US dollar index and the stronger energy and metal markets. The longer term trend is still down, however, from a technical point of view. Renegotiating NAFTA could cause some headwinds for our currency later this summer.  

 

- Frank Backx, HDC Grain Marketer