Commodities Report

November 21, 2017

 

Close Nov 21

Nov. 14

1 week change

Dec Corn

3.45

3.37

+ .08

Jan Soybeans

9.89

9.68

+ .21

Dec Wheat

4.25

4.28

- .03

Dec Hogs

60.65

60.00

+ .65

Dec Cattle

117.95

119.50

- 1.55

Cdn $

78.27

78.56

- .29

US $ Index

93.96

93.78

+ .18

Crude Oil

56.72

55.50

+ 1.22

Gold

1281

1283

- 2

US 10 Year Notes

124-23

124-24

- 1

TSX Stocks

16080

15940

+ 140

Corn and soybean prices were firmer over the past week. Positive news is still lacking, as the supply side increased markedly with the beautiful September and October weather experienced on both sides of the Canada/US border.

Probably the most bullish news is that funds are short more than 1.15 bln bu. of corn, a new record.  Usually when they get to extremes like this, prices start to head in the other direction, and often quickly. Fundamentals can be regulated to the back burner if specs start to cover their short position.

Also supporting corn futures is that the spreads are tightening. That means the nearby months are gaining somewhat faster than the deferred months. The Dec/Mar. spread went from over 14 cents to 11 now. Commercials, also known as grain companies, are buying a lot of corn futures.

Despite USDA’s shockingly bearish supply story on Nov. 9, corn prices are actually higher now than just before the report came out. If I was short, I know I’d be scratching my head wondering what’s going on. Perhaps the high cost of growing, handling and drying corn versus the very low selling price explains some of it.

This is felt even more in South America. They also have high transportation costs and limited storage which only adds to the unprofitability of growing corn there, especially in the interior areas.

First crop corn acres in Brazil could be down 20 to 30 percent from last year. It’s too early to predict their double crop acres, which are planted after the soybeans come off in Feb or March. This “safrinha”  corn makes up about two thirds of their normal production.

Outside markets were also quiet, as the US celebrates their Thanksgiving later this week. Most Americans take a 4 day weekend and more travel on this weekend than any other time of year. Hopefully there will be more action next week, but Christmas is suddenly only weeks away! 

- Frank Backx, HDC Grain Marketer