Glacier FarmMedia – After weeks of tumbles toward new contract lows, the month of March is looking mighty so far for grains on the Chicago Board of Trade (CBOT).
The May corn contract gained 12.5 United States cents per bushel over the past week to close at C$4.4125 on March 13. The May soybean contract climbed 48.5 cents to close at US$11.96/bu. The May Chicago soft wheat contract was up 13.25 cents at US$5.4425, while the Kansas City hard red wheat contract closed at US$5.8750, up 31.25 cents/bu. The Minneapolis spring wheat contract was 18.25 cents/bu. higher at US$6.6350.
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Jack Scoville from the Price Futures Group in Chicago said the grain market is showing some resilience, while the trade has already been made aware of the immense pressure on contracts as of late.
“We pretty much know how the bad news is going to hit this market. Let’s face it, prices have been beaten up pretty hard over the last few months. I feel like we kind of know just about everything about the prices, including all the bad news we possibly can,” he said. “Because of that, I think we’re heading higher.”
A large upcoming United States corn crop, plus a lack of export demand for U.S. soybeans and wheat were some of the reasons for the price declines. But short-covering and bargain buying have recently given the futures a boost.
Scoville acknowledged that while it is still early March, a dry winter across much of the U.S. is causing some concern. But what comes next may be a silver lining.
“If the dryness continues, we’re going to have a real problem. But until then, I think the warm weather has gotten people excited about really big crops coming down the pipe,” he said.
The U.S. Department of Agriculture released its monthly supply/demand estimates on March 8, which showed little changes to domestic numbers for U.S. crops. However, there were reduced estimates for South American corn and soybean production, albeit nowhere near the lower estimates coming from firms in Brazil and Argentina. But according to Scoville, the trade couldn’t have cared less.
“I feel like the market pretty much ignored those changes, in Brazil especially,” he said. “The changes weren’t so drastic that they were unexpected by the market. But (prices) went up anyway.”
With uncertainty surrounding the fast-approaching U.S. growing season, the upcoming influx of the South American crop and the large net short positions in the contracts, there may be more upside.
“This leads me to think we’re probably going to see some further buying over the next few weeks,” Scoville added.
— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg.
