Commodities Report
July 31, 2018

 

 

Close July 31

July 24

1 week change

Dec Corn

3.87

3.66

+ .21

Nov Soybeans

9.19

8.73

+ .46

Sept Wheat

5.54

5.10

+ .34

Oct Hogs

50.75

52.40

- 1.65

Oct Cattle

109.35

110.35

- 1.00

Cdn $

76.99

76.05

+ .94

US $ Index

94.28

94.62

- .34

Crude Oil

6900

68.74

+ .26

Gold

1224

1226

- 2

US 10 Year Notes

119-14

119-18

-4

TSX Stocks

16401

16424

-23

 

Prices are clawing back a portion of the large losses that occurred between late May and mid-July. The main fundamental change was the continuing crop losses in many of the world’s largest producing countries outside the US. Wheat supplies are taking the biggest hit, so it has become the market leader.

Crop conditions were steady in the US in the latest report. Corn is 72 percent good or excellent; last year it was 61 and record yields were achieved. Soybeans are at 70 percent in the top categories versus 59 a year ago. The US had their second best yield ever last year.

However, last year the crop started off in tough shape, as it was a wet cool spring. August and September brought all of North America ideal conditions for finishing the crops, resulting in the high yields. Maybe this year will be the opposite?

Despite some cooler weather lately, US crops are still developing well ahead of normal. 91 percent of corn has pollinated, compared to 82 normally at this time of year. 60 percent of US soybeans are podding, versus a five year average of 41 percent.

Forecasts have turned hot and dry in the extended forecasts, especially for the western part of the grain belt.  So far, most US crops have been blessed with adequate moisture all year. However, nothing is in the bin yet (except winter wheat, of course).

There is huge variability in Ontario crops. Overall, it is unlikely the province will see record yields. Weather for corn pollination was favorable, but much of the corn is shorter than normal due to dryness earl on.  Soybeans still have good potential if timely rains develop through August and September.

Ontario basis levels have been firm, especially in corn. Exporters have been pushing the bids, which could be tied to all the trade tensions. Cash corn, fob farm, broke $5.00 again, while deferred shipment wheat broke $7.00/bushel. Not bad numbers to grab a piece of. New crop prices lag, but deserve to be watched for pricing opportunities, especially in wheat.

Outside markets were quiet. Hog and cattle prices have been on a declining path since they hit their all-time record highs in 2014. Deferred hog contracts are trading at a huge discount to cash prices, as export demand has collapsed since all the trade disputes began. Farmers have also expanded herds with the lower feed costs, which are also at least partially due to Trump.

- Frank Backx, Hensall Co-op Grain Marketer