| | US crops | Canadian crops | Livestock comments
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US Crops
US soybean futures continued to rally this week, with prices making new contract highs for the 7th consecutive week. Strong soybean demand, expected tightening of supplies next crop year and speculative buying were once again credited with the price move. Corn prices also rose, which keeps the battle for US acreage very much alive. There appears to be more upside to the soybean and corn prices into spring. Nobody is saying otherwise, and there is no apparent reason right now to expect a price stall. The market tone is bullish even though South American crops are in good condition so far. In related news, President Bush signed the Energy Bill this week. Among other items intended to reduce oil usage and mandate energy efficiencies, it contained a sixfold increase in ethanol use to 36 billion gallons a year by the year 2022. Of that, 21 billion gallons will have to be from feedstock other than corn such as prairie grasses or wood chips. Still, using the ratio of 2.7 gallons of ethanol per bushel of corn, the 15 billion gallons that could still come from grain sources would require about 5.5 billion bushels of corn, or about 43 % of the 2007 US corn crop.
After last week's huge rally, Chicago and Kansas City wheat futures retraced some of those gains, while Minneapolis wheat futures held their ground. There are signs that importers are again shying away from the high wheat prices, evidenced by rejection of wheat offers on tenders requested by India and South Korea. However, it is notable that importers have purchased more wheat into next fall than in recent years, implying nervousness over wheat supplies. Over the week, January soybean prices gained 20 cents to close Friday at $11.77/bushel, and March corn gained 5 cents to close at $4.43/bushel. March Minneapolis wheat gained a couple cents to close at $10.78/bushel, while March Kansas City wheat and Chicago wheat lost about 30 cents.
Canadian Crops
Canola futures prices, after setting new contract highs on Monday, peeled off before recovering some of those losses by Friday. A recovery in the Canadian dollar (or weakness in the US) was cited as a restraining factor as the US bean complex rallied. Over the week, January canola lost $3.20/tonne to close at $497.90. New crop November canola futures closed $4.80/tonne higher at $500.70/tonne. Cash canola prices remain around the $10.50/bushel area.
Lethbridge feed barley prices firmed up to $202/tonne. With US corn prices moving higher, it seems like barley prices are responding. A near-term restraint to higher barley prices would be a stronger Canadian dollar. The CWB released updated PROs this week, and Pool B feed barley was increased by $10/tonne to $255/tonne, implying average Alberta elevator-delivered feed barley returns around $4.30/bushel. Malting barley PROs were unchanged. Wheat PROs were increased by $41 to $52/tonne, reflecting much of the recent strong move in world wheat prices. Edible pea bids remain strong, with yellow bids in the $8.50 to $9/bushel range and greens steady around $9/bushel.
Livestock Comments
Most US cash cattle trade took place around $92/cwt liveweight, $1/cwt lower than last week. An adequate supply of beef and plenty of competing meats is keeping cattle prices at bay. A bout of tough weather in feedlot areas seems to be the only hope for price improvement near-term. Friday's cattle on feed report will not be supportive either. On-feed numbers as of December 1 were 1 % higher than year ago, compared to lower numbers expected. November feeder cattle placements were up 12 %, much more than the 4 % expected. The only positive was marketings during November, up one percent verses expectations for a 2 % drop from last November.
Alberta fed cattle prices were $1 to $2/cwt lower this week, averaging around $83.40/cwt. Feeder cattle prices averages were off $2 to $4/cwt. 700 to 800 pound steers traded from $82 to $98/cwt and averaged $90/cwt. Equivalent weight heifers averaged $80/cwt.
US hog prices were steady at best this week as hog supplies remain ample. Weekly hog slaughter is still running 4 % above year ago levels. Futures market traders are anxiously awaiting the December 27 USDA hog inventory report to see if numbers are dropping in response to the low prices. Alberta's weekly average base hog price was $1.00/kilogram, little changed from last week.
The next report will be sent January 7, 2007. Merry Christmas everyone, and best wishes for a healthy and happy 2008! |
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