Market report for October 2 2013

by JOHN BANCROFT

Market Drivers:

  • Both old and new crop corn is currently based off the December futures contract. New crop basis has been holding at -$0.65 to -$0.70 per bushel in Western Ontario.
  • Old crop corn basis varies widely depending on location (i.e. -$0.10 to -$0.40 per bushel) and some users have come back into the market with the delay in this year’s harvest to-date.
  • The old crop soybean prices now reflect the 2013-2014 crop that is being harvested and the new crop soybean prices now reflect the 2014-2015 crop that will be planted next spring. See graph below.
  • The U.S. Grain Stocks report came in with higher stocks of corn and soybeans than anticipated by pre-report estimates. Market prices dropped for both crops.
  • The larger than expected ending stocks along with the better than expected yield reports drives the fact that the crop may grow larger than expected is having a negative impact on the market in the short run.
  • Due to the political gridlock in Washington , a partial shutdown of the US Government is resulting in many USDA daily reports not being issued. This impacts both the crop and livestock markets and could delay the monthly release of October reports depending on how long the shutdown carries on. The last shutdown in 1995 lasted 22 days. This leaves market participants without some key data resources to assist in making decisions. This may drive some volatility.
  • Check out the Daily Livestock Report on October 2, 2013 <http://www.dailylivestockreport.com/>  for some commentary on the impact of no USDA reports being released and the CME Group for their statement released on Tuesday <http://www.cmegroup.com/trading/agricultural> .
  • Weather in other wheat producing areas of the world and exports are providing some short term strength to the wheat market.

 
This Week’s Featured Graph:
 

 
The above graph is based on weekly Chatham Average Soybean prices:

  • It compares old crop soybeans (2013-2014) being harvested now (blue bars) and the new crop soybeans (2014-2015) to planted next spring with the red line (2 weeks only on left hand side of the graph).
  • The time period shown for each crop year is a two year period from pre-plant, growing season, harvest and storage
  • The old crop soybeans are from September 2012 to August 2014 and the new crop soybeans are from September 2013 to August 2015
  • With the harvest under way now, the 2013-2014 crop weekly average price is currently $12.50 per bushel down from the peak weekly average price of $13.70 per bushel (harvest pressure).
  • The new crop price is about $11.03 per bushel ($11.53 futures plus -$0.50 basis). This compares to a $12.20 per bushel price last year at this time.
Posted on: 
October 2, 2013