MarketsFarm — While key interest rates in the United States will stay put for the time being, corn and wheat prices on the Chicago Board of Trade (CBOT) declined steadily during the week ended Wednesday.
The U.S. Federal Reserve announced earlier Wednesday that the central bank’s policy rate will remain within 5.25 and 5.5 per cent, but future rate hikes are still a possibility.
“It’s been pretty much anticipated by the trade. So it was pretty much factored in,” Jack Scoville of The Price Futures Group in Chicago said. “It certainly hasn’t been a reason to buy the market, but there’s no reason to sell the market down either.”
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However, demand for U.S. grains was at the top of mind for traders. Wheat was a particular focus as exports reported by the U.S. Department of Agriculture on Oct. 26 totaled 7.114 million tonnes, compared to the 9.65 million shipped that time last year.
Over the past few months, U.S. wheat has struggled on the world market compared to less expensive Russian wheat.
“(The lack of exports is) being caused primarily by exports coming out of the Black Sea. Mostly from Russia, but Ukraine says they are still exporting through the Black Sea, as well,” Scoville said. “I think we’re going down looking for demand to show up, but we haven’t found it yet.”
He believes that export demand for U.S. wheat will pick up if Chicago wheat prices move down to US$5.50 per bushel.
Scoville added that the trade isn’t paying much attention to corn and soybeans, with the latter moving up in price at the expiry of their November contract, while being in the middle of their respective harvests. He also expects weather conditions in South America will moderate after the presence of dry conditions in northern areas and wetness in southern areas.
The U.S. Department of Agriculture will release its November world agricultural supply/demand estimates (WASDE) on Nov. 9. While he was unaware of the trade’s predictions yet, Scoville thinks demand for U.S. grains will come down.
“They might trim demand back for pretty much all (grains),” he said.
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
