Canada Know-Risk Weekly Agricultural Market Update 9-18-26
Canada Know-Risk Weekly Agricultural Market Update 9-18-26
Jason Labossiere
- Grains & Oilseeds
Perspective: Mid-Day Commentary for June 3
By: Arlan Suderman, Chief Commodities Economist
Today's Perspective Video: China Holds the Soybean "Trump" Card, and What a Card It Is!
June 3 - It's been quite a run in the equity markets, with new record highs set again this week. But stock values pulled back a bit today as a fresh round of Iranian strikes in the Middle East cast some doubts about the ability to see the war end any time soon, pushing crude oil and Treasury yields higher. Yet, the VIX is still trading near 16 as stock values remain just below those record highs, while the dollar index remains range bound near 99.5, albeit on the upper end of the recent range. Yields on 10-year Treasuries are trading near 4.49% at midday, while yields on 2-year Treasuries are trading near 4.09%. WTI crude oil is trading near $96 per barrel, while Brent trades near $98 per barrel. The grain and oilseed markets are mostly in the red again today, with the exception of the edible oil markets that are again on the rise on the back of our strong biofuel program. The strong U.S. biofuel program continues to support buying of the edible oils on breaks. That role of the market is to find a price level that will bring sufficient quantities of imported feedstock into the United States needed to supplement U.S. supplies to reach the RVO requirement for this year.
Factory orders rose an impressive 4.8% month-on-month in April as the U.S. economy gained momentum despite higher fuel prices. That was up from an upwardly revised 1.8% growth in orders in March, and above analyst expectations of 4.3% growth. Orders for manufactured goods have now risen in five of the past six months, while shipments of goods are up in six of the past seven months. Unfilled orders are up in 21 of the past 22 months. Other data showed solid growth in the service sector. The ISM Services Index came in at 54.5 for May, up from 53.6 previously, and above analyst expectations of 53.7. A number above 50 reflects month-on-month growth. The PMI Composite index for May came in at 51.5, down slightly from 51.5 previously, but still showing growth.
U.S. commercial crude oil inventories (excluding the Strategic Petroleum Reserve) fell 8.0 million to 433.7 million barrels in the week ending May 29, putting them 3% below the five-year average for late May. Total gasoline supplies dropped by 3.4 million barrels, putting them 5% below seasonal levels. Distillate stocks rose by 1.5 million barrels last week, leaving them 3% below levels typically seen in late May. The graphic below takes a look specifically at gasoline supplies in the United States - looking at them in terms of "days of supply." Fortunately, we started the year with above average levels, before the Iran war started. Those levels typically decline as we approach peak driving season, but higher airfare costs provide more incentive to drive this year. We've also seen a bit of a shift in refining priorities to fill the need for diesel, with much higher prices overseas trying to pull some of our inventories their way. Gas supplies are now becoming uncomfortably low, lending to elevated prices seen at the retail level.
Ethanol stocks dropped to 24.6 million barrels in the week ending May 29, down from 25.0 million the previous week, but slightly above the 24.4 million barrels on hand a year ago. Ethanol production rebounded to a solid 1,108K barrels per day last week, up from 1,089K bpd the previous week, and slightly above the 1,105K bpd produced in the same week last year. The production of ethanol utilized an estimated 104.5 million bushels of corn last week, up from 102.7 million bushels the previous week, but down from 105.8 million bushels a year ago, thanks to increased efficiencies in the industry. Estimated marketing year to date corn use for the production of fuel ethanol totals 4.079 billion bushels, up 26 million bushels from the previous year's pace, but more than 50 million bushels below the seasonal pace needed to hit USDA's target for the year.
- Grains & Oilseeds
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