Glacier FarmMedia – Corn and soybean contracts hit new lows, while wheat saw its weakest prices in nearly two months on the Chicago Board of Trade (CBOT) during the week ended Jan. 17.
Bearish production estimates for corn and soybeans from the United States Department of Agriculture’s (USDA) monthly supply/demand report released on Jan. 12 had major effects on prices, according to Jack Scoville from The Price Futures Group in Chicago.
“They increased yields for corn and soybeans in a rather significant way,” Scoville said. “The USDA really did increase demand, especially on the corn side, because of the increased production, but they didn’t increase demand as much as they increased production. That caught the market by surprise.”
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While last week’s USDA report caused much of the weakness on the markets, improved weather conditions in Brazil put additional pressure on corn and soybean prices, according to Scoville. U.S. soybean and wheat exports are also less than what they were last year.
“There’s a lot of talk around Chinese demand for soybeans being 20 per cent less this year due to reduced hog herd sizes. That’s also hurting the soybeans,” he said.
Scoville added that wheat futures were also down due to lower prices for wheat exports from the Black Sea region. However, added shipping costs due to vessels re-routing away from the Red Sea amid recent missile attacks are also affecting markets.
“It’s something that we’re watching and we’re hoping that it’s figured out very soon, but so far, the Houthis continue to bomb very indiscriminately,” Scoville said.
He hopes for an uptick in demand in the coming weeks, while also paying attention to weather conditions in the U.S. and South America.
“If the weather becomes problematic in Brazil, it will be positive for prices and we have a whole growing season ahead of us,” he added. “Last year, we had a dry year and all sorts of problems. Those supported prices, as well. Mostly weather and demand are things to keep an eye on.”
March corn dropped to US$4.40 per bushel on Jan. 17, while March soybeans fell to US$12.03/bu. on Jan. 12. March spring wheat in Minneapolis also reached a new contract low of US$6.80/bu. on Jan. 17, while March Chicago and Kansas City wheat contracts were below US$5.80 and US$6/bu., respectively, for the first time since late November.
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
