Wednesday October 6, 2010



Commodity
Period
Price  
Weekly Movement




Corn CBOT
Dec.
4.8850
?
17 1/2
cents
Soybeans CBOT
Nov. 
10.6200
?
37    
cents
Wheat CBOT
Dec.
6.5800
?
25 1/2
cents
Wheat Minn.
Dec.
7.0525
?
18 3/4
cents
Wheat Kansas
Dec.
7.1000
?
6    
cents
 
 
 
 
 
 
Canadian $
Dec
0.9888
?
202
points
CORN
Corn values fell sharply during the week before making up some ground ahead of Fridays crucial USDA report. The trade is expecting the USDA to reduce the US corn yield from 162.5 to around 160 b/ac. This result will reduce US corn stock projections to much tighter levels, however this has likely already been factored into current prices through speculators. Therefore an anti-climactic report will likely produce a sell-off.

With US corn stocks down nearly 700 million bushels year to year and world grain stocks down over 1.5 billion bushels, the world faces the potential of an extremely tight 2011-12 world coarse grain situation. This setting the stage for a likely long term bull market in feed grains

The trade continues to debate the size of this year’s Chinese corn crop and also the level of inventory stocks at hand. Any decline in production will see China again requiring imports and therefore further tightening global supplies.

This week the US dollar continued to lose ground against foreign currencies, reaching a 15 year low. The US Federal Reserve is starting to draw criticism from around the world for deliberately devaluing the US currency in an effort to attract trade. The Canadian dollar reached a 5 month high during the week.   

SOYBEANS
Soybeans finished lower for the week as the trade anticipates a larger US crop production estimate in Friday’s USDA report. Soybean markets are experiencing the opposite effect to corn with yield estimates coming in well ahead of expectations leading to burdensome stock projections.  The trade will be watching closely the USDA’s acreage estimates for the coming year to see if there is any significant shift from soybean to corn planted acres, to help address the balance.

Strong demand from China will however absorb a large US crop, particularly if South American production is reduced due to La Nina weather concerns.  

According to Statistics Canada, Ontario soybean production has risen 8.1% from 2009 levels to 2.8 million metric tonnes. This will be the largest crop since 2006. Nationally, beginning stocks for 2010/11 increased by 36% to 300,000MT and next year’s production is expected to increase by 14.8% to just over 4 million bushels. 


WHEAT
Wheat lost considerable ground this week before rallying ahead of Fridays USDA report. The report is expected to estimate a smaller US crop but still should project large US ending stocks. Wheat prices are more likely to be buffered by corn and soybean price action in the aftermath of the report.

The Western Australian wheat crop continues rapidly deteriorate as it approaches maturity, with conditions expected to remain dry for some time. As a result the trade is expecting the USDA to drop its Australian wheat production estimate by several million tonnes. 

Some weather forecasters believe Russia and Europe may be heading towards the coldest winter in 1000 years. With the summer heat wave already severely delaying planting, crops may be further damaged from the cold. 

Contract prices for October 6th, 2010 at the close are as follows:
SWW at $192.66 per tonne ($5.24/bu.), SRW at $175.93 per tonne ($4.79/bu.), HRW at $200.09 per tonne ($5.45/bu.), and HRS at $208.27 per tonne ($5.67/bu.).

Chart of the Week 

       Ontario Grain Market Commentary for October 6th, 2010
       By Seamus Hoban, Grain Farmers of Ontario