Commodities Report

August 22, 2017

 

Close August 22

August 15

2 week change

Dec Corn

3.60

3.68

- .08

Nov Soybeans

9.38

9.24

+ .14

Sept Wheat

4.03

4.29

- .26

Oct Hogs

63.75

70.55

- 6.80

Oct Cattle

107.70

109.05

- 1.35

Cdn $

79.65

78.38

+ 1.27

US $ Index

93.50

93.85

- .35

Crude Oil

47.83

47.54

+ .29

Gold

1287

1275

+ 12

US 10 Year Notes

126-19

126-06

+ 13

TSX Stocks

14992

15107

- 115

 

Beans were a bit better, but corn and wheat remained under pressure over the past week. Rains hit some of the driest areas, including Iowa. There is no doubt that average yields have gone up since the start of August, in both the US and Ontario.

 This isn’t good for price if USDA was accurate in their August 10 report, which was as of August 1 conditions. That report pegged corn at the third highest yield ever, and soybeans at the second highest. Crop ratings suggest USDA may have been too high in those estimates.

Corn is 62 percent good or excellent, well below the 75 percent rating last year. Soybeans gained 1 percent in the latest report to be at 60 percent good/exc. A year ago at this time, it was 72 percent.

It was fortunate that the markets had the June, early July rally. Corn went up $.43, soybeans $1.40 and wheat $1.28. Since the high, however, corn is down $.56, soybeans $1.26 and wheat plunged $1.65. If hindsight was foresight, we’d all be a darn sight better off!

Grain prices are in the tank locally, However, I checked Pigeon Co-op’s elevator bids. They operate in the thumb of Michigan. Current bids are US$ 2.91 and 2.92 for old and new corn. Soybeans there are US$ 8.43 for old and 8.42 for new. Red wheat is only US$ 3.38. This illustrates how important our dollar is to our grain prices.

Unfortunately, much of the selling in Chicago is coming from commercials (aka the grain companies). Speculators were the big buyers in the June/July rally. However, they are long 40,000 contracts of corn, short 14,000 soybeans and short 34,000 wheat contracts now. None of these positions are extreme, so likely not price supportive.

This spring, Brazil harvested a record soybean crop of 114 mln mt, which blew away the previous record of 96.5 mlm nt set each of the 2 previous years. Now they just completed their double crop (safrinha) corn crop harvest, which put their total crop at 98.5 mln mt. Their previous record was 85 mln mt, set 2 years ago.

They don’t have the infrastructure to properly store or ship those kinds of quantities. There are massive piles of grain stored on the ground, especially in Mato Grosso, the interior state where much of the increased production has taken place. Spoilage will become an issue.

The canola crop in Western Canada will see poor yields due to drought. However, acres are a record, which will offset some of the yield loss. Stats Canada releases their crop production report on August 31.

Hogs fell nearly 10 percent in the last week, and are near the March lows again. Cattle remain weak and are at their worst levels since last Nov. There isn’t much inflation in metals or energies either, as deflation keeps its grip on most commodities. 

- Frank Backx, HDC Grain Marketer