| | US crops | Canadian crops | Livestock comments
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US Crops
Crop futures prices were volatile last week as several issues were being factored into the market.
(1) US corn and soybean planting is still about one week behind average, and the lateness of crop development is even more of a concern. Wet, cool conditions have been delaying crop development.
(2) USDA announced that 24 million acres of Conservation Reserve Program land would be eligible for haying or grazing later this summer. Landowners can apply for that use upon paying a nominal fee. This policy move could reduce demand for other feeds, such as corn and distillers grains, and possibly even slow the rate of cow herd reduction.
(3) The unrest among Argentina's grain farmers was again the news. Although the Argentina government made a token reduction of soybean export taxes, farmers there were not satisfied. Interruption in the soybean supply from Argentina implies continued strong demand for US soybean supplies. The weekly export grain sales report confirmed another week of solid US exports.
(4) Crude oil prices bounced around the $130/barrel level, but seemed to have a downward bias. Also, the US dollar index once again seems to be potentially forming a bottom.
(5) Pressure is being applied to the US Commodity Futures Trading Commission to further restrict the action of speculative and "hedge funds" in the futures markets.
(6) Profit-taking before month-end, and rolling of July futures positions forward were other factors adding to price volatility last week.
Corn futures ended the week almost unchanged from the previous Friday. At one point, December corn traded below $6/bushel, but closed Friday at $6.26/bushel. July soybean futures ended four cents lower at $13.63, and November soybeans gained a cent to close at $13.54/bushel. After making new "recent" lows, US wheat prices recovered. The condition of the US hard spring wheat crop is the lowest in many years, and concerns are increasing about the lack of moisture in southern Saskatchewan, and also eastern Australia. July Chicago wheat closed nine cents higher, July Kansas City wheat closed four cents higher, and July Minneapolis wheat closed 38 cents higher. Grain price volatility will likely increase as summer approaches.
Canadian Crops
Canola futures prices again followed the US soy complex as domestic news was lacking. Early week frosts damaged some canola stands in Saskatchewan, and some reseeding will be required. Canola futures traded in the upper zone of the recent price range, but failed to break to the upside. Commercial stocks of canola have been reduced during May while farmers concentrated on seeding. This could lead to some improved basis bids. Over the week, July canola futures lost $2.80/tonne to close at $620.50. Chart support on July remains at $600 and resistance is at $638/tonne. November canola futures closed at $644.90/tonne, down $3.10 on the week.
Lethbridge-area cash barley prices slipped $8/tonne lower last week. Cash barley prices often wane as farmers complete seeding operations and return their attention to grain marketing. July barley futures lost $17.40/tonne as "long" position holders exited by selling July.
Livestock Comments
US cash cattle traded Friday at $95 to $96/cwt, steady to $1 higher than the previous week. Beef cutout values remain strong, in the mid-150's/cwt. US live cattle futures closed Friday near their contract highs set earlier in the week. Feeder cattle futures were also strong, supported by the higher live cattle futures, and despite the high corn price. Expectations of renewed volume exports to South Korea continue to be a positive market factor. However, massive protests in Korea against importing US beef leave uncertainty in that regard. The US cattle futures markets are overbought from a chart perspective, and are due for a retracement lower.
Alberta fed cattle prices were steady, with most sales in the $87 to $91.50/cwt zone. Alberta feeder cattle prices had a stronger market tone. Slaughter cow and bull prices were steady to a bit weaker, but are expected to be seasonally strong into August. Cow-calf pair sales, in some cases, met the $1200 level, implying more optimism among buyers.
US cash hog prices were $5/cwt lower over the past week, and are still $2/cwt above this time last year. Hog futures prices ended with slight gains after trading lower early in the week. US pork usage continues to be very strong, with exports to China possibly rising due to hog losses in the earthquake area. Alberta's weekly average Index 100 hog price was $136/ckg, compared to $141 the previous week, and $140 last year. |
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