Commodities Report

July 4, 2017

 

Close July 4

June 20

2 week change

Dec Corn

3.96

3.88

+.08

Nov Soybeans

9.81

9.39

+.42

Sept Wheat

5.55

4.88

+.67

Oct Hogs

71.20

69.70

+ 1.50

Oct Cattle

115.10

113.50

+ 1.60

Cdn $

77.01

75.56

-.55

US $ Index

95.63

97.16

- 1.53

Crude Oil

46.83

43.58

+ 3.25

Gold

1222

1244

- 22

US 10 Year Notes

125-04

126-22

- 1-18

TSX Stocks

15182

15153

+ 29


This report will now be done weekly, as volatility has increased, as we enter into the heart of the 2017 weather market and growing season.

Crop prices were all firmer over the past 2 weeks, led by wheat, which showed a gain of $1.15 since the start of June. That was a huge move but pales beside the move in Minneapolis spring wheat futures, which exploded by $2.75 per bu. since mid-May. Little rain is forecast for the dry Northern Plains and Canadian prairies for the next 14 days.

USDA released their quarterly stocks of grains as of June 1, which is three quarters through the marketing year for corn and soybeans. Soybean stocks at 963 mln bu were 20 mln less than traders thought, but still 91 mln more than last year.

Corn supplies were pegged at 5.225 bln bu., 100 mln more than expectations and 514 mln more than last year at this time. Wheat stocks are up 208 mln bu from a year ago at 1.184 bln., which was 48 mln bu above expectations and the largest in 29 years.

USDA also reported on planted acres in the June 30 report. Soybean acres at 89.5 mln are easily a new record , but 400,000 less than pre-report guesses. Last year US farmers planted 83.4 mln., so there are 6.1 mln more acres this year compared to 2016. Soybeans jumped $.20 on the news, even though that doesn’t seem that bullish.

Some of these added soybean acres came from corn, which saw its acres drop to 90.9 mln., versus 94 mln last year. However this was 1.1 mln more than expected, so the shift from corn to beans wasn’t as large as most experts thought it would be. Corn lost a nickel initially, but stormed back with the soybean and wheat gains.

All wheat plantings are a record low of 45.6 mln ac, 300,000 less than expected, and well below last year’s 50.2 mln. Spring wheat plantings are at a 45 year low, and drought is causing serious yield losses. There could be a serious shortage of this high protein wheat which is used to make bread.

As of Tuesday, June 27, large speculators, aka managed funds, were short a record 119,000 soybean contracts. This can easily add fuel to any upside rally. Recent action in wheat is proof. Specs were record short 163,000 contracts 4 weeks ago, and have covered all those positions, contributing to the $1.15 gain during their short covering spree.

One and two week forecasts are turning much hotter for the Midwest, with the taps turning off in the second week. Some think the drought area will expand into the heart of the Midwest. With ample to surplus rainfall in many key areas this spring, crop damage could occur more quickly, as root systems aren’t as well developed.

The weather market is in full swing, and the recent wheat action is a warning that price swings could easily become larger and quicker. 

 

- Frank Backx, HDC Grain Marketer