Commodities Report

September 5, 2017

 

Close Sept 5

August 29

2 week change

Dec Corn

3.58

3.49

+ .09

Nov Soybeans

9.69

9.37

+ .32

Dec Wheat

4.43

4.32

+ .11

Oct Hogs

63.75

60.25

+ 3.50

Oct Cattle

104.45

106.25

- 1.80

Cdn $

80.78

79.84

+ .94

US $ Index

92.40

92.12

+ .28

Crude Oil

48.65

46.32

- 2.33

Gold

1340

1316

+ 24

US 10 Year Notes

127-19

127-07

+ 12

TSX Stocks

15084

15049

+ 35

Prices were finally firmer over the past week, after the recent 8 week slide, that saw corn fall $.73, soybeans $1.26 and wheat $1.80 in Chicago. It is interesting that prices hit their low August 31, which is exactly when they bottomed in 2016.

No year is ever the same, but last year corn rallied $.44, soybeans $.83 and wheat $.41 by mid October. It is not unusual for markets to make early harvest lows in big crop years. Perhaps the worst in futures is behind us again for the 2017 crop year?

As mentioned last time, Ontario basis is weaker than a year ago, as our dollar showed more strength. It initially surged when our GDP showed a surprisingly strong 4.5 percent growth rate, the best in six years. This could lead to the Bank of Canada raising our interest rates again.

Also supporting our dollar was the strength in other commodities, including metals and energies. Copper trades at a three year high, while gold has rallied $130.00 per ounce since July, to a one year high. Crude oil also gained a bit, while gasoline rose to a 25 month high due to Harvey.

Perhaps speculators and investor are finally seeing the value in commodities, which are cheap on a relative basis, especially compared to the booming stock markets. There can be a herd mentality in this process. It will be interesting to see if this initial spark can turn into a longer term trend.

Supporting grains and commodities in general is the weaker US dollar index. It is near its lowest level since January, 2015. The US economy still isn’t running on all cylinders, and the political scene there still seems to be in disarray. A weaker dollar isn’t a bad thing for America. North Korea remains a wildcard.

USDA comes out with their new crop estimates on September 12. Most expect a slight drop from their August estimates. However, the drop likely won’t be enough to start a major uptrend. Support from outside markets could however sustain or add to the minor gains we saw this past week.

But with USDA, you can’t rule anything out.

This report will move back to every other week now that the North American growing season is mostly behind us. Volatility usually subsides this time of year, but as I mentioned earlier, every year is different.  

- Frank Backx, HDC Grain Marketer