Prices were mixed over the past 2 weeks. Weather remained non-threatening. A warm, wet 2-week forecast will add bushels and help crops reach maturity. There is no risk of frost in any of the main growing areas.


Last Monday’s US corn crop ratings report was a bit of a surprise as 3% fell out of the good or excellent categories to only 55% now. Last year it was 68% at this time. Illinois showed the largest drop, falling 8 point to only 38%.

The US corn crop remains well behind in maturity. Only 55% is dented. Last year it was 84%, while the average for this date is 77%. A large portion of the crop needs a lot more time to finish.


Only 92% of US soybeans are setting pods. That means over 6 million acres are not, or about twice the total acres planted to soybeans in Ontario.  An early frost would obviously be devastating to the soybean crop also.


Ontario corn and soybean fields are also late, with a huge variability in crop conditions even in a small area. Overall yields are unlikely to be as strong as they have been in the past 2 to 3 years. Unfortunately, prices don’t look like they will make up for the smaller crops.


USDA will release their monthly demand/supply report on September 12. Most are looking for a slight reduction in yield compared to their August report. The other important component is acres. Will USDA acknowledge the acres not planted?

Brazil usually starts planting their soybeans by mid September. Conditions there are very dry for this time of year, so very little planting is occurring. However, Brazil has a very wide planting window, so markets aren’t concerned yet.


Wheat prices firmed when Australia predicted their wheat crop would only be 19.2 million mt. USDA has them at 21 mln, which is still well below the 25 mln mt average they have achieved over the past 5 years. This should help North American exports.


Livestock markets remain on the defensive. Cheap grain usually leads to cheaper meat prices, as farmers walk the grain off the farm. Cattle hit a 10-year low in the latest week. Seasonals are usually weak heading into the fall.


Outside markets were mixed. Recessionary fears linger, keeping a lid on interest rates. The low rates and amount of liquidity in the system is keeping stock markets firm, however, as all the savings etc. need to have a home.

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Grain prices were mixed over the past week. The yield and acreage debates continue. Weather will be a factor over the next 6 weeks at least as crops remain behind in development.


The Pro Farmer crop tour pegged the US average corn yield at 163.3 bushels per acre. USDA put it at 169.5 in their August 12 report. If the US has 85 million acres, that is a difference of 527 million bushels, a significant difference.


Soybean pod counts were significantly less than last year, and average, especially in the eastern grain belt, where conditions were more difficult. Even in Iowa, where crops look the best, there were fewer pods than usual.


In their latest crop ratings report, conditions did improve over the past week. Good/excellent corn improved 1 percent to 57 percent of the crop. Last year it was 68 percent at this time.


Soybeans improved 2 percent to 55 good/excellent. Last year it was 66 percent in the top two categories. On August 12, USDA put the soybean yield at 48.5 bu/ac versus 51.6 last year.


Most of the US Midwest will see below normal temperatures over the next 2 weeks. This is not what crops need right now. Corn that is denting is only at 27 percent compared to 59 last year and 46 percent on average.


79 percent of US soybeans are setting pods, A year ago it was 94, while the average is 91. The bottom line is that the main growing areas, including Ontario, will need to be frost free for at least the next 6 to 8 weeks.


The next USDA crop report will be released on September 12. Hopefully, it will clear up some of the large discrepancies that traders are trying to reconcile.


Then there’s the demand side. On August 23, China unexpectedly raised the tariffs on many US exports, including agricultural products. Surprisingly, Trump tweeted on the following Monday, that negotiations were on again. A day later China denied that.


Crop futures have given back most of the gains they made on the spring weather. Nearby corn futures topped at $4.64 in June, while soybeans hit $9.21 and wheat got to 5.58. Now we’re at 3.57, 8.46 and 4.74, respectively.


Livestock futures aren’t doing so well either. USDA said they have 11.1 million cattle on feed, the highest since they started that report in 1996. US live cattle futures are not far from their lowest price since 2010.


Nearby hog futures rallied to $.93 per pound in May after the African swine fever story hit. Prices are back to the $.63 area now, despite the huge decrease in pig numbers, especially in Asia.


The low prices in agriculture that exist today will present a major challenge to all farmers that operate in the free markets. The US is helping its farmers with huge subsidies. Even though we have an election in less than 2 months, politicians here seem oblivious to what’s going on.

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Corn and wheat were lower while soybeans were higher over the past week. USDA released their monthly demand/supply report on August 12, and once again, there were more bearish surprises in the report.


The biggest shock was in corn. The US yield was put at 169.5 bu/ac, much higher than the 164.9 bu anticipated. That’s actually 3.5 bu higher than USDA predicted last month, despite the trying weather much of the eastern grain belt faced all spring.


They also dropped projected US exports by 100 million bu and corn for ethanol by 25 million. The final carry out (CO) then will be 2.181 billion bu. That is a massive 561 bu more than traders expected. Corn dropped limit on the “news” and another 16 cents today.


Acres were reduced by 1.7 million to 90 million. Most think that number will be reduced in further reports, but there is no guarantee that will happen. The corn crop is still far from maturity, so weather remains very important for the next 2 months.


The soybean yield was left unchanged at 48.5 bu/ac. Planted acres were reduced by 3.3 million to 76.7 million. Production then would drop 165 million from last month’s estimate. Exports were reduced by 100 million bu, however.


This puts the soybean CO at 755 million bu. This is a nice drop from the 1.07 billion bu that USDA says the US will have left over at Sept 1 this year. Unfortunately, that would still be the second largest CO in US history.


The US wheat fundamentals were left basically unchanged, with the CO still above the burdensome 1 billion bu mark. World wheat stocks were dropped a minor 1 million mt, so there is no shortage of wheat in the world either.


The Argentine peso dropped 25 percent in the past week. The new leader is not market-friendly, and higher taxes could be put on ag exports. A lower peso makes Argentine grain cheaper for foreign buyers.


Financial markets have become more volatile, as uncertainty is increasing in many parts of the world. The China/US trade deal is far from being settled. The situation in Hong Kong seems to be worsening. Relations between Iran and the US are deteriorating.


Gold keeps gaining as a result. Bond markets remain firm as interest rates ease. Evidence builds that world economic growth is slowing. The US federal government deficit so far this year is already greater than it was for all of 2018 at $867 billion.

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Commodities Report



Prices retreated further over the past week. Important support areas were breached, causing heavy speculative selling. Fundamentals took another bad turn, as the trade war between the US and China escalated.


$4.20 on Dec corn and $. 8.90 on Nov. soybeans were violated. Prices immediately fell another 20 cents and 36 cents respectively. At the recent low, corn is 70 cents from its June high, while soybeans have dropped 93 cents.


It’s not that the US crops are improving that is causing the drops if you believe the weekly crops ratings reports. In the latest week, US corn that is good or excellent fell 1 percent to 57 percent. Last year it was 71 at this time.


Crop progress continues to lag, and the 2-week forecast is for below normal temperatures. This will slow development, especially in corn. Only 23 percent is in the dough stage; last year it was 54 percent.


Soybean ratings held steady at 54 percent good/excellent. Last year it was 67 percent. 72 percent of US soybeans are flowering. Usually, it is around 90 percent at this time of year.


Trump upped the ante in the trade war when he tweeted he would put a 10 percent tariff on another $300 billion of Chinese exports. Apparently, this was because China was not buying as many US ag products as he thought they should.

On the weekend, China responded by saying they would buy no more ag products from the US. One would have thought this would have dropped grain prices drastically, but they took it in stride. Perhaps there is some light at the end of the tunnel?


It now takes over 7 Chinese yuan to buy 1 US dollar. This is the lowest yuan/US dollar rate since 2008. Trump immediately accused China of manipulating their currency. This is a further irritant in the escalating trade war.


The US Federal Reserve cut their base lending rate 25 basis points last week. That is the first drop since the economic meltdown in 2008. Inflation remains subdued and the ongoing trade friction will have a negative impact on growth worldwide.

There is now $15 trillion of investment grade bonds that have a negative interest rate. German bonds have joined the club for the first time. This is more proof that the world economy isn’t operating on all cylinders.


What it also means is that central bankers have limited ability to counter slowing economies with monetary policy should a recession develop. Meanwhile, fiscal policy may be limited also, as most governments are already running huge deficits.

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Commodities Report
June 11, 2019


Close June 11, 2019

June 4

1-week change

Dec corn



+ .03

Nov soybeans



- .22

Jul wheat



+ .11

Oct hogs



- 2.00

Oct cattle



+ 3.05

Cdn $



+ .55

US $ index



- .39

Crude oil



- .11




+ 1

US 10 year notes



+ 9

TSX Stocks



+ 134


Prices were mixed over the past week. Recent rainfall ended up being less than forecast, allowing farmers the opportunity to get more crop seeded. However, planting progress is still behind normal and many acres were planted under less than ideal conditions.


As of June 9, 83% of US corn was planted where usually they’re finished by then. This means nearly 16 million acres aren’t in and much of that is in important states like Illinois, Indiana, Ohio, Michigan and South Dakota. US corn was rated at 57 % good and excellent while last year it was rated at 77 %.

Soybeans were 60% in the ground, much below normal at 88%. Only 34% were emerged by June 9, well behind the 73% for the 5-year average. The eastern belt, which includes Ontario, is the furthest behind.


Today (June 11) USDA released their monthly demand/supply report. They lowered old crop corn exports 100 million bushels, raising the carryout (CO) by a like amount to 2.2 billion. The old crop soybean CO exports were lowered 75 million bushels, pushing the CO to a new record 1.070 billion bushels.


New crop corn was a better story. Acres were lowered 3 million for obvious reasons and yield was dropped 10 bushels/acre to 166 bushels/acre. Usage dropped 425 million bushels also, but the CO could still drop to 1.675 billion. That is down 810 million from what was predicted last month and over 23 % from 2018/19.

The new crop soybean yield and acres were left unchanged from the May report. Demand was also left unchanged, so the CO is expected to be over 1 billion bushels again. Not as rosy an outlook here.


Prices reacted as expected on the “news” with corn gaining 12 cents and soybeans up only 1. It now takes less than 2 bushels of corn to equal a bushel of soybeans. Corn should be the price leader all year, as it needs heat units to mature.

The outlook for the balance of June is for below normal temperatures and above rainfall for the entire Midwest (and Ontario). The late planting and even later emergence will likely make temperatures a key variable to watch all summer.

The buying binge by large speculators has been historic. In 3 weeks, they bought 370,000 corn contracts or 1.85 billion bushels. That’s 175 million bushels more than the total carryout the US is expecting for the new crop year!


Specs are still short soybeans and wheat, but not near as short. Three weeks ago, they were short a record 719.000 combined grain futures; now they’re only short 105,000. That means they bought over 3 billion bushels. Wow.

Volatility will be the norm. It feels to me like we will need near ideal weather all summer to achieve the fundamentals that USDA reported today. Things have sure changed in the past month.

- Frank Backx, Hensall Co-op Grain Marketer

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Commodities Report

April 16, 2019



Grain prices were lower over the past two weeks. The USDA report on Apr 9 increased the 2018/19 corn carry out 200 mln bu., to 2.035 bln. That is a big increase, but not totally unexpected considering they raised the March 1 corn stocks 270 mln bu. in the March 29 report.


USDA also raised crop estimates for both corn and soybeans in Brazil and Argentina, adding more supply to already burdensome world stocks. Their weak currencies lately also make their supplies more competitive for importers.


The demand picture isn’t nearly as friendly as it was a couple months ago either due to the African Swine Fever in China, which has decimated their hog herds. The disease is spreading to other countries, especially in Asia.


Speculators sold another 24,000 corn contracts in the latest weekly report, and now are short over 294,000 contracts, a new record. Despite all this added selling, the bottom hasn’t totally fallen out of the corn market.


In Dec. 2017, they were short 250,000 corn contracts. They began to cover and by May, 2018, they were long 220,000 contracts. That buying of 2.35 bln bu caused a rally in corn futures from $3.35 to $4.10, for a nice 75 cent gain.


Their current record short position could turn into a positive again shortly. Whenever they have too much company on one side of the market, prices invariably change direction, and often in a dramatic fashion. Corn just needs a spark to get the short covering started.


Perhaps it will be the North American spring weather that will cause it. There is no doubt that weather is getting more extreme. The US has had a slow start to the 2019 planting season, but it is still very early. Current forecasts look wet until at least the end of April.


Traders have learned from the past two or three years, however, that farmers can plant most of the crop in a very short period of time, and even if planting is a bit later, yields can still end up above average. However, the Midwest is somewhat overdue for a subpar yield.


Another bullish development is that ethanol prices are record high in Brazil. They derive most of their ethanol from sugarcane, and the crop is very poor this year. They have the world’s most developed bio-fuels economy, so imports from the US will have to increase.


The cure for low prices is low prices. Perhaps we are near the low point in the current down cycle in grain prices, which began after the big bull market in 2012/13. At 7 years, it is lasting longer than normal.


The other concern for farmers is that input prices only seem to go in one direction. Seed, fertilizer, chemical and equipment prices remain in uptrends. This obviously further squeezes margins for farmers.


Let’s hope there is some light at the end of the tunnel here shortly. As mentioned, the best hope for this is to get the large speculators to cover their record short positions.


- Frank Backx, Hensall Co-op Grain Marketer

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