Commodities Report

December 12, 2017

 

 

Close Dec 12

Dec 5

1 week change

March Corn

3.48

3.54

- .06

Jan Soybeans

9.76

10.09

- .33

March Wheat

4.11

4.33

- .22

Feb Hogs

66.55

70.60

- 4.05

Feb Cattle

119.15

120.30

- 1.15

Cdn $

77.68

78.79

- 1.11

US $ Index

94.14

93.40

+ .74

Crude Oil

56.87

57.64

- .77

Gold

1243

1268

- 25

US 10 Year Notes

124-05

124-10

- 5

TSX Stocks

16123

15935

+ 188

Crop prices drifted lower again over the past week. Some rain, plus more in the forecast, put a damper on futures, especially soybeans.  Exports have been falling below the amount needed to achieve USDA predictions which obviously isn’t helping.

USDA updated their demand, supply estimates today, Dec 12. As is usual for the Dec report, changes to US and world carry outs (CO’s) were minor.  Prices rose marginally after the report, but gave back those minor gains by the close.

The US corn CO was lowered 50 mln bu to 2.437 mln., on a 50 mln bu bump in corn for ethanol. This would still be the largest CO in 30 years. The world CO was guessed at 202.7 mln mt., but came in slightly higher at 204.1, on a larger than expected Brazil crop.

The US soybean CO was raised 20 mln bu. to 445 mln., as exports were lowered 25 mln, and seed was up 5 mln. bu. This would be the highest CO since 2006. The world CO came in at 98.3 mln mt., slightly higher than the 97.8 mln expected.

The US wheat CO was put at 960 mln bu., 22 mln more than traders thought. This is still, however, less than last year’s 1.181 bln bu, due to lower acres. The world CO was a minor 1.3 mln mt higher than thought, but the highest in decades.

The bottom line is that supplies of all crops are very comfortable, if not burdensome.  However, prices  are likely near wrung out on the downside.  At least all farmers have to hope so, as the cost of growing and handling crops has gone up much faster than crop prices the past couple of years.

There were a lot of negative signs in other markets also, as livestock, metal and energy prices were also under pressure. This keeps the deflation argument intact, and will likely keep central banks from raising interest rates.

Wage inflation often precedes interest rate hikes, and there is little evidence of that, despite low unemployment numbers on both sides of the border. This will change in Ontario come January, when the minimum wage rises to $14.00 per hour from the current 11.60.

There is no doubt workers need and deserve the raise, but it will be a burden to many industries, including agriculture. 

- Frank Backx, Hensall Co-op Grain Marketer