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August 2018 Commodities Update

30 August 2018

August 2018 Commodities Update

We are pleased to provide the following commodities update for August, 2018:

Oil Market Update


Sixty-five percent of the USDA soybean crop is in good to excellent condition vs. 59% last year and pricing is still hovering around the 2.5 year low.  It is anticipated that there will be strong yields and large acreage, however, there remains a slight upward pricing pressure due to the US/China talks resuming and any resolution will be bullish to pricing.


Canola is still commanding a very large premium over soybean as China is importing canola to bypass soybean tariffs.

Therefore, as previously stated, take soybean instead of Canola, if possible.  Any open 2018 canola or soybean requirements should be booked at this point.

To note: although the US/China trade resolution will ease canola basis prices, it will take considerable time to take effect.


Weather has been much more favorable in the Dakotas vs. 2017.  The Yields are looking great, however, there is still a bit of uncertainty on crop size and analysts are taking 100K acres out of North Dakota’s forecast.  The demand remains very strong, and with the crop size shrinking, many large chippers have already covered their mid-oleic sun requirements.

Take your mid-oleic sun coverage now for 2019 and consider booking high oleic sun mid-September.


The upward corn yield per acre trend continues in the US and it is expected to be at a record level. However, total US corn yield can be impacted by a smaller acreage compared to 2017, as well as a much faster and early maturing crop this year. Final yield indications should start to firm up in the upcoming USDA crop production report on Sept 12.

The latest (August) US ending stocks projections were reported to be more than 15% lower than the estimated 2017/2018 crop and more than 25% lower than the 2016/2017 crop.

Global demand and supply are both reported to be strong and adequately balanced. However, the December 2018 corn futures market remains at a higher point than the last two years at the same period. Various producers have publically announced inflationary pressures in the market affecting input and supply chain costs which will result in sweeteners and starch price increases.

Cocoa Bean Update

Recent movements in the cocoa futures market have led to the chocolate industry taking coverage until the first half of 2019. Further coverage is recommended if the market hits again the $2,200 / MT price point. At current levels, it is suggested to hold before taking additional chocolate coverage. Cocoa powder prices remain stable and demand continues to be strong. This is a good time to take coverage for 2019 before the stronger demand starts to drive powder prices up.

Gelatine Update

The gelatine market continues to struggle. The rapidly growing global demand for collagen (driven by the regenerative medicine market) and the global beef hide gelatine supply shortage (mostly driven by plant closures in Argentina and New Zealand) are the main factors impacting the market.

Marine (fish) collagen is also in high demand and far exceeding supply. Of the three gelatine/collagen precursors, beef, pork and fish, customers are being urged to look towards pork as there is more availability. Beef, pork, and fish raw materials all contain the same basic amino acid profile and are relatively interchangeable.  However, pork gelatine will soon become less available if the demand continues and gelatine prices are expected to continue to rise.

Sugar Market Update

Sugar hit a near 10-year low on nearby world sugar ($0.10 USD/lb) and the market is being characterized by increased world production and flattening demand.  India will likely dethrone Brazil as the world’s biggest sugar producer in 2018/2019 and the weather in India has been ideal for production.  Also, with this being an election year, government incentives have increased causing a bearish/flat outlook to remain for the indefinite future.