Is $6 Corn a Christmas Gift? Here's One Factor that Fueled the Corn Market this Week
U.S. Farm Report 122521 - Roundtable 1
Nearby corn futures pushed past the $6 mark this week, and for farmers who have unpriced grain in the bin, the markets may have felt like an early Christmas gift.
Chip Nellinger of Blue Reef Agri-Marketing says there is one major factor that fueled the corn and soybean markets this week, and that's weather.
"I think it really is a full blown weather market now," says Nellinger. "It's the weather forecasts in Brazil and Argentina, it's drying out, we're getting into a critical time frame and their crop production in those areas. And it's really a full fledged weather market as we go into this long Christmas and New Year's timeframe where the volume usually shrinks a little bit."
Nellinger thinks the changing forecasts could provide some volatility over the coming weeks. Mike North of ever.ag agrees, saying weather will be a key factor in the grains in the weeks ahead.
"We have talked about South American weather as a key watch point going forward into this winter because the tight supplies did exist. We knew we needed everything that we could get our hands on out of South America. So the moment that we begin to compromise your crop, or at least provide a stress point, that puts a question on yield," says North.
He says there are also other factors at play helping support the grain market heading into Christmas.
"You add some greater volatility, and you pile on to that Argentina's announcement of export taxes and quotas, it shrinks that supply even further. So, it becomes a snowball effect. And it opens the door for funds and other speculators that come in and add premium to this market."
