| | US crops | Canadian crops | Livestock comments
,
US Crops
Corn and soybean futures started the week a bit lower on ideas that weather was drying out in the US mid-west, enabling late seeding to occur. However, rains returned to many already wet areas this week, leading to a renewed price rally to all-time highs on most contracts. USDA has resurveyed the wet area for updated acreage estimates to incorporate into their June 30 report. Prior to the opening of futures trading Monday, USDA will release their estimate of June 1 grain inventory and 2008 seeded and harvested acreage estimates. Additional price-positive news is required to keep the corn market moving higher. Prices will go higher than necessary to ration demand to whatever the available supply will be (or perception thereof). Price volatility is expected to continue. Wheat futures have been supported by the higher corn prices on the feedgrain connection, but also due to rains delaying the US winter wheat harvest and possibly reducing wheat quality. Longer term, unless the corn price keeps rising or a more serious problem develops in a major wheat-producing area, wheat prices will struggle to maintain current price levels. Wheat market analysts keep increasing the estimates of record world wheat production. Other factors supporting grain prices this week were a weakening US dollar and a corresponding rally to record highs in crude oil prices.
Looking ahead, there are some factors that could curb price enthusiasm. The US government is considering (1) easing the US ethanol production mandate and/or reducing the 54-cent/gallon tariff on imported ethanol; (2) placing further restrictions on speculative activity in commodity futures markets; (3) allowing early opt-out of Conservation Reserve Program acreage for the 2009 crop. Any or all of these factors could be announced at any time. However, weather, and its' effect on crop production prospects, will still be the dominant factor for grain markets right through harvest.
Here are some of the futures price changes over the week:
July soybeans up 50 cents to close at $15.82/bushel
November soybeans up 51 cents to close at $15.60/bushel
July soybean oil up 1.69 cents to close at 65.57 cents/pound
July corn up 34 cents to close at $7.55/bushel
December corn up 32 cents to close at $7.87/bushel
December Minn wheat up 32 cents to close at $10.13/bushel
Dec. KC wheat up 20 cents to close at $9.66/bushel
Canadian Crops
Canola futures prices moved higher this week, but as a distant follower to the US soybean and crude oil prices. Canola prices closed above price resistance levels, with the November canola futures up $5.30 to close the week at $690/tonne. That is the highest close since March 5. For reference, the contract high for November canola is $772/tonne, made back on March 3. Barley futures prices traded sideways this week despite the higher US corn prices. Some cash barley bids did move higher, however, so if you have feed barley to sell, shop around (as usual).
StatsCan released their Canadian acreage report this week. Here are the acreage numbers for the major crops:
 | 2008 (million acres) | % of 2007 |
| All Wheat | 25 | 116 |
| Canola | 15.8 | 107 |
| Barley | 9.1 | 83.5 |
| Oats | 4.4 | 81 |
| Peas | 3.8 | 104.5 |
| Flax | 1.5 | 116 |
| Summerfallow | 5.8 | 75 |
Market reaction to the report was minor, despite canola acreage about one million higher than expected, and barley and oat acreage lower than expected. There may be more price implications of these acreages as the next marketing year progresses.
Updated CWB PROs were released this week. Old crop PROs were left unchanged. Most new crop wheat and durum PROs were increased by $8 to $10/tonne. Malting barley PROs were increased by $6/tonne, and Pool A feed barley PROs were increased by $10/tonne from the May estimates.
Livestock Comments
US cash cattle traded at $99 to $99.50/cwt, $3.00 higher on the week. US beef cutout values jumped $6 to $7/cwt, with choice cutouts near $167/cwt. The test of beef demand will be after the July 4 holiday time period. Live cattle futures held their "premium structure" this week, with August around $105 compared to the $99 cash price, and deferred fed cattle futures successively higher through to next April. The market continues to trade the expectation of strong beef demand and lower available beef supplies.
Alberta fed cattle prices were $2 to $2.50/cwt higher, with most sales in the $91.25 to $94/cwt range. Alberta feeder cattle price averages were steady to $2/cwt higher. Some pressure was noted on heifer classes, consistent with the stronger feedgrain prices. This week, it was announced that Tyson Foods had agreed to sell their operations at Brooks (Lakeside) to XL Foods (Nilsson Bros.) for $107 million.
US cash hog prices moved a bit higher, but pork cutout values were little changed. Lean hog futures were lower ahead of Friday's quarterly hog inventory report. All hogs, as of June 1, were estimated at 104.5 % of last year, and the breeding herd was shown as 1 % lower than last year. This rate of sow herd reduction was not as much as most analysts were expecting, considering the record-high feed costs. Alberta's weekly average Index 100 hog price was a bit higher this week at $134.50/ckg, compared to $132 last week. |
|