MarketsFarm — Recent rains in parts of South America, as well as a correction in the markets, have paused rallies in corn and soybeans on the Chicago Board of Trade (CBOT), according to one trader.
Jack Scoville, vice-president of The Price Futures Group in Chicago, said that while central and southern Argentina are still mired in dryness, the northern part of the country and parts of Brazil received precipitation.
“That’s part of the reason we’re seeing the down move (on Wednesday) in the corn and the soybeans, especially the beans,” he said, adding that soybeans and soymeal approaching contract highs triggered a correction.
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“That brought on some profit-taking. Corn was brushing up against some recent highs as well. I think both markets are taking a little bit of speculative profit-taking based on the recent rallies,” Scoville explained.
Wheat prices took a tumble over the past week. The March Chicago wheat contract fell nearly 33 cents per bushel during the week, while the March Kansas City hard red wheat contract and the March Minneapolis spring wheat contract declined 18 and 10 cents, respectively (all figures US$).
While precipitation has fallen on U.S. wheat-growing areas, Scoville believes the prevalence of cheaper Russian wheat on the global wheat market, despite the country’s invasion of Ukraine, is pulling prices down.
“The fact that Russia keeps on selling wheat at cheaper prices, about $50 per tonne cheaper than ours, we’re not doing a lot of business,” he said. “Every time we try to rally the wheat market, we get reminded of that.”
The U.S. Federal Reserve released the minutes from its Jan. 31-Feb. 1 meeting just prior to the end of Wednesday’s trading session. They indicated that while inflation was coming down, more key interest rate hikes may still be needed.
“Everybody is looking for interest rate increases,” Scoville said before the minutes were released. “That would be a little bit negative for corn, bean and wheat prices.
“I think the weather will (affect prices). I think the war (in Ukraine) will. I think U.S. dollar movement will, up to an extent anyway.”
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
