Commodities Report
August 21, 2018

 

Close Aug 21

Aug 14

1 week change

Dec Corn

3.74

3.77

- .03

Nov Soybeans

8.86

8.80

+ .06

Sept Wheat

5.27

5.42

- .15

Oct Hogs

56.25

52.00

+ 4.25

Oct Cattle

110.10

108.80

+ 1.30

Cdn $

76.92

76.42

+ .50

US $ Index

95.10

96.68

- 1.58

Crude Oil

65.92

67.25

- 1.33

Gold

1196

1196

0

US 10 Year notes

120-14

120-04

+ 10

TSX Stocks

16352

16304

+ 48

 

Grains were narrowly mixed in the week following the very bearish USDA report on August 10. The reaction that day was a 42 cent drop in soybeans, 11 cents in corn and 18 cents in wheat. The fact there was little follow-through to the downside this week could be a sign that prices are more near a low than a high.

Markets usually bottom on bearish news. The fact USDA expects the US soybean carry out to beat the previous record by 211 mln bu., or 36 percent, and prices haven’t made new lows is a testament to this. Eventually all the negative news does get built in.

Markets are slipping again as I write this, however. The Pro Farmer crop tour is on, and surveyors are finding stronger than expected yields. Perhaps USDA wasn’t that far off the mark with their recent yield estimates?

The corn that is good or excellent in the US did drop 2 percent and soybeans 1 percent in the latest Monday report. Ratings are still much higher than last year at this time, however. Last year proved the correlation between crop ratings and final yield isn’t that strong.

The US drought monitor shows some bad areas, but most of the main producing areas are not lacking for moisture, and there has been no shortage of heat anywhere. US corn is 44 percent dented; normal is 26. US soybeans setting pods are also 8 percent more than normal.

The Ontario crops are also doing well for the most part. We too have had an abundance of heat and humidity. The only complaint I’m starting to hear is that moisture is getting excessive in some areas. The forecast shows greenhouse conditions will continue over the next 10 days.

Wheat has been the weakest link lately, after outperforming over the past 6 weeks. Russia is indicating they will export as much wheat as a year ago, despite all the talk about production problems there.  Last year they were the world’s largest exporter of wheat.

The hog market showed a strong rebound after going to oversold levels. China is by far the largest producer and consumer of pork and they are dealing with African swine fever. This could give a shot in the arm to North American exports, even with the tariffs.

The biggest move in the outside markets was a 1.6 percent drop in the US dollar index. This could be helpful to commodities in general, but it is just giving back some of its recent strong gains. Trump stated China is manipulating their yuan to lower levels to make up for the tariffs. China has denied it of course. Trade frictions persist.

- Frank Backx, Hensall Co-op Grain Marketer