Commodities Report
June 5, 2018

 

 

 

Close June 5

May 29

1 week change

Dec Corn

4.04

4.19

- .15

Nov Soybeans

10.21

10.43

- .22

July Wheat

5.10

5.36

- .26

June Hogs

76.55

75.50

+ 1.05

June Cattle

107.20

103.40

+ 3.80

Cdn $

77.12

76.84

+ .28

US $ Index

93.85

94.84

- .99

Crude Oil

65.43

66.63

- 1.20

Gold

1302

1300

+ 2

US 10 Year Notes

119-23

120-26

- 1-03

TSX Stocks

16114

15945

+ 169

Last week I concluded things were fine in Ontario cropland, at least pricewise.  What a difference a week can make this time of year.

Prices suffered their largest losses in a long time this past week. Dec ember corn had a 50 cent rally from January 2018 to its recent high which it hit on May 29. In the 5 trading days since that high, prices gave back over half of those gains.

Over those same 5 trading days, soybeans shed 40 cents, and are filling in the upside gap they left on May 21. Meanwhile wheat has fallen 47 cents over that short timeframe.

Much of this could be weather related. Planting is 97 and 87 percent done on corn and soybeans. The Midwest forecast has turned warmer with mostly adequate rainfall, which is obviously a good forecast for crop development.

Another reason could be that trade negotiations between China and the US have deteriorated. This is likely more psychological than real when it comes to soybeans in particular, as they need all those beans to feed their people.

A year ago, prices topped just after their July 4th holiday, as the spring wasn’t the best in the US. However by July, the weather straightened out, and the US ended up with the highest corn yield in history, and the second highest soybean yield ever.

There is no doubt large speculator and investor buying buoyed prices since the start of 2018. One could easily argue prices wouldn’t have hit the levels they did without their involvement. It’s a two way street, however, and their liquidation now is quickly sending prices back down.

Fortunately, farmer selling was fairly strong during the price rise. It has now slowed to a crawl. It seems $5.00 corn and $13.00 soybeans should be reasonable targets for Ontario producers, as this isn’t the first time prices got nose bleed at those levels.

$7.00 was also there for 2019 harvest wheat for farmers who look that far forward. Because of the fixed storage rates set by the exchange, there is huge carry in wheat futures, which allowed this “gift” to be offered.

The 2018 weather market is still in its infancy. Crop problems in South America and the Black Sea area are supportive to the supply side. The demand side is also on a solid footing in terms of domestic usage and exports for North American farmers.

Volatility will be the norm, changing with each new weather forecast.   Market participants put most emphasis on the NOAA (also known as the NWS) 6 to 10 and 8 to 14 day forecasts, which come out daily at around 3:30.

- Frank Backx, Hensall Co-op Grain Marketer