Commodities Report
June 12, 2018

 

 

Close June 12

June 5

1 week change

Dec Corn

3.98

4.04

- .06

Nov Soybeans

9.75

10.21

- .46

July Wheat

5.35

5.10

+ .25

Oct Hogs

64.65

62.45

+ 2.20

Oct Cattle

107.35

106.90

+ .45

Cdn $

76.99

77.12

- .13

US $ Index

93.78

93.85

- .07

Crude Oil

66.26

65.43

+ .83

Gold

1299

1302

- 3

US 10 Year Notes

119-13

119-23

- 10

TSX Stocks

16267

16114

+ 153

 

The freefall in corn and soybean prices continued the past week. Corn dropped 42 cents since May 24, and at their worst level since February. Soybeans have shed $1.15 since their high trade on May 29. This proves again markets have a hard time making gains, while gravity seems to have a strong effect on the downside.

Much of the Midwest is experiencing excellent growing conditions. Temperatures are warm, and most areas are getting the moisture needed for rapid crop development. As of Sunday, June 10, corn and soybeans are rated 77 and 74 percent good or excellent, very high numbers.

Unfortunately much of SW Ontario cannot say the same thing. Farmers had to wait for soils to dry out under cool conditions this spring and then a 4 day heat wave zapped the moisture from the soil. Recent forecasted rains never came, resulting in uneven germination, especially in soybeans. It is impacting wheat yields also.

Forecasts show little chance locally for any meaningful precipitation over the next 10 days. The fortunate thing is that the weatherman hasn’t been that accurate so far this growing season, so we have to hope they are wrong this time too. This reminds me of the people who try to predict grain prices!

USDA released new demand/supply estimates on June 10. The old crop corn carry out (CO) was reduced 80 mln bu., while the new crop CO was lowered 105 mln. This wasn’t unexpected, however. The CO will drop 500 mln bu., which is likely why corn rallied a dime on the news.

The old crop soybean CO was lowered 25 mln bu to 503 mln., while 2018 crop was lowered 30 mln bu. to 415 mln. The final CO will fall 115 mln bu, year on year, but that’s still a pretty comfortable number, so beans didn’t react.

The US wheat CO is expected to fall from 1.07 bln bu to 955 mln for the crop year that will end on June 30. Still lots of wheat in the world, too, but prices rallied 20 cents after the report, nonetheless. There are crop problems in the Black Sea area, Australia, in in US hard red winter wheat areas.

Outside markets were mostly quiet. Trump remains the big newsmaker. He’s making friends with an old enemy (North Korea), while treating traditional friends (Canada) with disdain. He seems obsessed with the Canada’s tariff on dairy products for some reason.

This is likely the greatest challenge or threat supply management has faced since it was implemented in the 1970’s. It affects 8-13 percent of farmers, depending on the protected sector. Unfortunately, the US wields the big stick when it comes to trade, and most other economic matters.

- Frank Backx, Hensall Co-op Grain Marketer