Since Tuesday’s WASDE report offered no surprises, grain markets largely showed no reaction and farmers are left wondering what steps to take next in a market driven by global factors.
Farm Futures Senior Editors Ben Potter and Bruce Blythe joined this week’s Ag Marketing IQ In Depth to talk about how quickly the markets move, what nudges them and how farmers can grab pricing opportunities.
Fundamentals are the drivers less frequently. For instance, the corn, soybean and wheat markets saw significant rallies in recent weeks, driven largely by external factors like crude oil price volatility and geopolitical tensions in the Middle East.
“Strictly looking at the fundamentals for grains, they do not support the kind of price action we’ve seen this week,” Blythe explained. He pointed to the Iran war, which pushed WTI crude oil prices to nearly $120 per barrel, a four-year high. But then crude oil dropped 8.5% after a tweet from former President Trump suggested a resolution in Iran, corn and wheat prices also fell sharply.
Farmers are now faced with critical decisions about locking in prices. December corn futures nearly hit $5 per bushel this week, a level many find tempting. “You see moves like that, and you might ask yourself, is this a good time to at least lock some prices in for the new crop?” Blythe said.
Monday’s price spike, Blythe and Potter agreed, prompted some farmer selling of both old and new crop grain. And maybe a few sell orders tied to farmers seeking prices above their break even.
Global factors continue to dominate the conversation. Brazil’s soybean harvest is halfway complete, with a record-breaking crop of 6.6 billion bushels expected. Meanwhile, geopolitical tensions in the Black Sea region and U.S.-China trade negotiations add further uncertainty. “You used to be able to just pay attention to what was going on in your backyard,” Potter said. “That’s no longer the case. You have to think globally.”
Looking ahead, the March 31 prospective plantings report will be a key market driver. Analysts are debating whether the recent rally in corn prices will encourage more acreage or if rising fertilizer costs and geopolitical disruptions will offset planting incentives.
“It’s hard to say how things will play out,” Blythe said. “Farmers need to keep a close eye on global markets because it could be a very wild spring.”
Hear more about keeping your seat in this volatile grain market on Ag Marketing IQ In Depth.
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