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Commodities Report

January 30, 2018

 

Close Jan 30

Jan 23

1 week change

March Corn

3.62

3.51

+ .11

March Soybeans

10.00

9.86

+ .14

March Wheat

4.57

4.22

+ .35

Feb Hogs

72.45

72.25

+ .20

Feb Cattle

124.95

124.75

+ .20

Cdn $

81.17

80.40

+ .77

US $ Index

89.25

90.20

- .95

Crude Oil

6435

64.35

0

Gold

1336

1337

- 1

US 10 Year Notes

121-21

122-13

- 24

TSX Stocks

15960

16347

- 387

The wheat market has become the new leader. Drought conditions in the Southern Plains are now extreme. Only 14 percent of Kansas and 4 percent of Nebraska’s hard red wheat are in the good to excellent categories. No rain is in the near term forecast.

Growing conditions in South America also deteriorated. Some key parts of Argentina are too dry, and some areas of Brazil are getting copious amounts of rain. Not only is this likely hurting the crop to be harvested, but could also result in a sharp drop in double crop corn acres.

The next 6 weeks are the critical time for South American crop production, as it is like August first in our growing season. This is often when the action will start if there is a serious weather problem. Unfortunately some production areas need to lose crop so others can benefit.

These weather concerns are coming at a time when speculators are betting in record numbers that prices will fall further. They did cover a few shorts in the latest report, but are still near record short in corn and wheat. This could easily add fuel to the current weather spark.  

Soybeans are now up 55 cents, wheat has gained 45 cents and corn is plus 17 cents in roughly the past 2 weeks. Corn and wheat are breaking their 100 day moving averages for the first time since last June. Trends may finally be turning higher.

Weather markets are fickle, however, and can turn on a dime on revised weather forecasts. The next week still looks hot and dry in Argentina, and there is little confidence in the forecasts beyond that, especially in terms of rainfall. However, temperatures are expected to moderate.

Selling increments on rallies is still the best marketing plan, in my opinion. Putting open orders in above the market is the easiest way to execute that plan. Looking at charts helps to determine those selling points. Perhaps up 15 in corn, 25 in wheat and 30 in soys might be a good place to do a little bit.

Grains are finally outperforming most of the other commodities. Metals, energies and livestock were all virtually unchanged in the past week. A weaker US dollar index did lead to a stronger Canadian dollar. Stock markets were weaker. A further drop is very possible, considering how far into record territory they have travelled. 

- Frank Backx, Hensall Co-op Grain Marketer

 

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