October 10, 2017
Close Oct 10
1 week change
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Crop prices were little changed again. In the past 4 weeks Dec corn has been confined to a 12.5 cent range. Remember the old days when sometimes the markets would move that amount in a day, or even an hour?
US harvest has been delayed due to rain, especially in the western grain belt. As of Sunday Oct. 8, only 22 percent of US corn was combined, and 36 percent of the soybeans Normally, it is 37 and 43 percent respectively this time of year. A drier forecast is in store for some of the wettest areas.
US basis levels are recovering after a large drop due to low water levels in some of the eastern tributaries to the Mississippi River. Barges got hung up, so the newly harvested crops couldn’t move into an export position, backing the supplies up into the countryside. Rain now is alleviating that situation.
USDA comes out on Oct 12 with new crop estimates, and demand/ supply numbers. All season most traders thought USDA was too high in their predictions. However, August and September weather was ideal, so most think USDA won’t drop their crop estimates from last month.
Ontario’s recent weather has added to our crops also. Soybean yields are all over the map. Areas that got timely rains are seeing good yields. Temperatures have consistently been above normal over the past 6 weeks, speeding up corn’s maturation. More above normal temperatures are predicted for the next 2 weeks.
It now appears that Brazilian farmers will significantly cut back on corn acres, and plant more soybeans. Some think Brazil’s corn acres will be the lowest in 13 years. The freight costs on corn are eating them up. Soybean freight costs are high also, but at least they don’t have to truck as many bushels. A lack of storage space is also an issue.
It is mainly economic considerations causing the corn acres drop, but weather is also a factor. It is dry there, and farmers usually plant the corn before soybeans. The dryness is expected to last for the next two weeks. It is surprising that the soybean market is outperforming corn lately, but price movements are so small, it’s insignificant.
Outside markets were a bit better, but volatility throughout the whole commodity space is very low right now. The best up trending markets are the US stock indices, which continue to set new record highs almost daily. The media may not like Trump, but the equity markets sure do. ♦
- Frank Backx, HDC Grain Marketer