With the calendar soon flipping to 2014, market experts share their thoughts on what factors could be game-changers for grain prices.
Volatility seems to be the new normal for the corn and soybean prices. The last few years have brought us record-high prices, unbalance between supply and demand, as well as horrible weather challenges.
So, what will be in store for 2014? Several market experts have weighed in add their predictions (in no particular order) are below. These comments are experts from a recent Top Producer article that features analysis and commentary from 15 ag market analysts. Read the full article: They Say It’s a Bear Market
Game-Changer #1: Ethanol / Biofuel Usage
On Nov. 15, the U.S. Environmental Protection Agency released a proposal about Renewable Fuels Standard. EPA proposed a range of 15 billion to 15.52 billion gallons of renewable fuel in 2014. That range for fuels such as corn-based ethanol and biodiesel compares to a quota in 2007 legislation that called for 18.15 billion gallons. While it is only a proposal, it does seem to signal a change for the future of the ethanol industry.
Brian Basting of Advance Trading says if this proposed change occurs, it will be bearish for corn.
Alan Brugler of Brugler Marketing, agrees. "The black swan event I fear most is the attempt to limit the use of biofuels," he says.
Game-Changer #2: China
What a country of more than 1.5 billion people eats has huge implications for the U.S. Sue Martin of Ag and Investments Services, says we should never underestimate China’s ability to buy corn, soybeans and other crops. "This could be one of the surprises for 2014," she says.
Brian Basting of Advance Trading, agrees. He says China’s imports and production levels in 2014 are a potential market surprise.
Game-Changer #3: South America
South America is now a powerhouse, in terms of corn and soybean production. Mike North of First Capital Ag, says U.S. farmers should keep close tabs on the country’s growing season.