Commodities Report

October 3, 2017

 

Close Oct 3

Sept 26

1 week change

Dec Corn

3.50

3.52

-.02

Nov Soybeans

9.55

9.64

- .09

Dec Wheat

4.48

4.54

- .06

Dec Hogs

62.10

58.10

+ 4.00

Dec Cattle

114.90

113.50

+ 1.40

Cdn $

80.07

81.04

- .97

US $ Index

93.58

92.96

- .62

Crude Oil

50.42

51.91

- 1.49

Gold

1275

1297

- 22

US 10 Year Notes

125-11

126-00

- 21

TSX Stocks

15732

15472

+ 260

Grain prices were a little lower over the past week. Trends remain sideways, nearer the lower end of the recent ranges. Volume and volatility remain low as harvest progresses in North America. As of Oct 1, 17 percent of US corn and 22 percent of US soybeans were harvested. Average is 26 percent for both.

USDA released their quarterly stocks report on Sept 30, which is as of Sept. 1. This is the final carry out (CO) for last year’s corn and soybean crops. Corn was put at 2.295 bln bu., up 558 mln from the previous year. However, it was 55 mln bu. below traders’ expectations.

The 2016/17 soybean final CO was lowered to 301 mln bu, down 44 mln from what USDA said on Sept 12. The previous year was 197 mln bu. The 301 mln bu. was 34 mln less than traders thought it would be, so was considered a bit friendly.

It is interesting that last Dec., USDA said the final soybean CO would be 475 mln. bu. USDA consistently overstates the soybean CO, and the margin of error is huge year after year. I suppose one can conclude that the 475 mln bu. CO that USDA is projecting for the 2017/18 crop will end up much lower than that.

US wheat stocks at Sept 1 were pegged at 2.253 bln bu, 50 mln higher than traders thought. This the highest number in 30 years. World stocks are also burdensome. Russia is now the largest wheat exporter in the world.

The US is now 3 weeks into the new marketing year for soybeans and corn. Compared to last year at this time, soybean sales are up 29 percent. Corn sales are slow, however, and are 42 percent less than a year ago. The wheat marketing year in the US began July 1, and exports are 13 percent lower than in 2016.

In world weather, Australia is dry, and wheat production there could be a 10 year low. South America weather is straightening out, as rain falls in Brazil, while Argentina is drying out. All eyes will be on the skies in South America for the next 5 months.

Livestock markets were firmer, especially hogs. The US hog herd is large, and up over 2 percent from last year, which is more than most traders thought. However, in markets often perverse logic, prices rallied on the bearish news.

A headwind for most commodities, including energies and metals, lately is the stronger US dollar index. It bottomed on Sept 8 at 91.01, and now sits at 93.58, for a 3 percent gain. That is probably the main reason our dollar dropped from $.82 to .80 now. This has at least helped Ont. grain and livestock basis values. 

- Frank Backx, HDC Grain Marketer