Commodities Report
April 24, 2018

 

 

Close April 24

April 17

1 week change

Dec Corn

4.06

4.06

0

Nov Soybeans

10.29

10.45

- .16

July Wheat

4.84

4.81

+ .03

June Hogs

74.85

76.75

- 1.90

June Cattle

105.05

104.90

+ .15

Cdn $

78.03

79.84

- 1.81

US $ Index

90.73

89.49

+ 1.24

Crude Oil

67.80

66.30

+ 1.50

Gold

1333

1350

- 17

US 10 Year Notes

119-10

120-17

- 1-07

TSX Stocks

15460

15371

+ 89

Prices were mixed over the past week. Weather forecasts are improving, so planting will finally proceed. So far planting progress has been very slow.

In their latest weekly report that comes out every Monday, USDA said 5 percent of US corn was planted. Normally 14 percent is planted by now. Last year it was 15 percent. Only 3 percent of US spring wheat was planted; normal is 25.

US winter wheat ratings held steady at 31 percent good and excellent. That’s a very low rating, but it should improve over the next few weeks, as some rain has fallen on the driest areas.

Wheat futures were steady, however, as some damage is likely irreversible. . Basis on the hard red wheat grown in Kansas and Okla, where the drought was the worst, has gained 40 cents a bushel, reflecting the tighter supplies of that wheat class.

Ontario basis is always determined by US basis. The exchange rate and local demand/supply conditions also obviously affect it. This is most true for soybeans and wheat, as we are always in an exportable position in Ontario in those two crops.

The new crop Ontario soybean basis has been strong. At $2.45 over at Hensall elevators, it is at its best level in 11 months. Then the Canadian dollar was only $.73 versus the US dollar. Today we are near $.78, with the same basis.  This means US basis is strong, which reflects strong cash markets.

The Brazilian safrinha, or double crop, corn is getting dry, especially in the southern areas. Should this continue, corn could take on a leadership role in Chicago. Two thirds of Brazil’s corn production is planted after their soybeans came off in February and March.

 Crude oil remains strong, and is at a 4 year high. Last May, it was in the low $40’s,; now it’s not that far from $70. Energy is a basic input into nearly everything, especially agriculture.  The cost of growing crops keeps heading in the wrong direction.

This should support grain prices longer term.  It also adds to the cost of production of most things. Higher inflation nearly always causes interest rates to rise.

US 10 year Treasury notes traded at 3 percent, the highest rate in 7 years. This affects longer term rates, such as mortgages. US short term rates are also rising, and are expected to rise more during 2018.

The Bank of Canada didn’t raise rates at their recent meeting, however. This allowed our dollar to lose some ground. It appears our central bank wants a lower dollar, as economic numbers have been lacklustre lately.

 

Farmers love lower interest rates. Money is a huge cost of production also, and it automatically means higher basis, and better prices. Thank you, Stephen Poloz. Keep up the good work! 

- Frank Backx, Hensall Co-op Grain Marketer