Wednesday October 20, 2010



Commodity
Period
Price  
Weekly Movement




Corn CBOT
Dec.
5.7350
?
4 1/4
cents
Soybeans CBOT
Nov. 
12.1200
?
35 1/2
cents
Wheat CBOT
Dec.
6.8300
?
19 1/4
cents
Wheat Minn.
Dec.
7.4375
?
7 1/4
cents
Wheat Kansas
Dec.
7.1550
?
27 1/2
cents
 
 
 
 
 
 
Canadian $
Dec
0.9716
?
49
points

CORN
Corn futures suffered in the commodity sell-off which followed China’s surprise decision to raise interest rates, for the first time since 2007. However by Wednesday the trade had started to view the interest rate decision as a sign of economic strength and improving demand. As a result corn made a complete reversal with a strong rally. 

For Ontario growers the Chinese interest rate decision has helped to rally the US dollar and deliver some improvement to local basis levels. 

Funds viewed the initial fall in corn futures as the cue to liquidate their corn contracts, capturing some windfall profits from the recent rally. However funds still maintain an overall long position. 

The US harvest continues with extremely poor yield results in Iowa, however better results are being seen in Minnesota and North Dakota. 


SOYBEANS
Soybeans were less impacted by Tuesday’s commodity sell-off than corn or wheat, and finishing the week above $12 for the nearby contract. Soybeans continue to battle with corn to secure the necessary 2011 acreage.  

Some in the trade now believe November 2011 soybeans may mimic the 2008 pattern that saw futures surge towards $14.50 in early March. 
The extremely fast pace of the North American soybean and corn harvest is placing significant demands on grain transportation systems, which is driving barge freight rates to record highs and placing pressure on export basis. Despite the higher freight rates, barge transport is up 22% from the same time last year. 
Surging meat demand and extraordinarily strong crushing margins continue to drive Chinese soybean imports. China currently has 5.6 times more hogs than the US yet meal use is only 1.6 times larger. As industrial livestock production grows, higher protein use per animal will significantly increase demand. 



WHEAT
Wheat lost ground again this week with speculators showing more enthusiasm for the corn and soybean markets. 

The USDA tightened its world wheat ending stock projection by 1.8% from their September projection. Ending stocks are now 11% tighter than in 2009/10, while futures are around 30% higher. The change was largely due to smaller production in the US (down 1.13 million tonnes) and increased feed demand around the world. Production estimates were also downgraded for Canada (- 300,00 tonnes) and North Africa (- 400,000 tonnes), while production estimates were increased for the EU  (+ 500,000 tonnes) and Brazil (+ 150,000 tonnes). The Russian and Ukraine estimates were unchanged. 

The 2010/11 world ending stock projection of 174.66 million tonnes is still much larger than the ending stocks seen in 2008/09 (165.33 million tonnes) and 2007-08 (124.38 million tonnes). 

Contract prices for October 20th, 2010 at the close are as follows:
SWW at $208.06 per tonne ($5.66/bu.), SRW at $191.13 per tonne ($5.20/bu.), HRW at $215.59 per tonne ($5.87/bu.), and HRS at $238.44 per tonne ($6.49/bu.).

Chart of the Week 

       Ontario Grain Market Commentary for October 21st, 2010
       By Seamus Hoban, Grain Farmers of Ontario