MarketsFarm — The Pro Farmer Midwest Crop Tour earlier this month brought attention to a potential reduction of corn yields in some areas of the U.S., causing a rally in prices.
However, after crop conditions did not fall as expected, prices underwent a correction, according to one analyst.
The U.S. Department of Agriculture (USDA), in its weekly crop progress report released Monday, said the country’s corn crop was at 54 per cent good to excellent — down only one point from the previous week, while also being a 10-year low. However, the weekly change was not as bad as the trade expected.
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Jack Scoville, vice-president of The Price Futures Group in Chicago, said the resulting price declines in corn spilled over into soybeans despite little change in the latter’s yields.
“(The report) took some of the bullish influence out. We’ve seen the supply news for a while and we shifted back to the demand side of the market,” he said, adding that the U.S. crop is facing competition from Brazil’s safrinha crop.
Scoville also cited the recent suspension of USDA’s weekly export sales report as another factor leading to lower prices. The report won’t be published until further notice due to “challenges” following changes made to USDA’s reporting system.
Wheat prices also received the same boost to prices on Monday as corn and soybeans, but unlike the two other crops, they are stuck in sideways trade. Harvest pressures and higher-than-expected wheat yields are being countered by worldwide supply concerns and the uncertainty over Ukrainian grain shipments.
“We did it in the winter wheat markets here in Chicago. The Minneapolis (spring wheat) market’s been locked in and is still locked in this bottoming pattern because its harvest is now past the 50 per cent point,” Scoville said. “It helped that corn and soybeans were higher…but (wheat) is trying to turn the trends upward for a post-harvest rally.”
While he believes soybeans will be stuck in sideways trade next week, Scoville anticipates rising prices for corn and wheat.
“I think we could go to $7.15 (per bushel) in December corn, and Chicago wheat, maybe towards $8.75/bu. Kansas City (December hard red) wheat contract up towards $9.35/bu.,” he said (all figures US$).
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
