Can Outside Markets Move Ag Commodities?

October 17, 2017 08:51 AM

Even with harvest delays in the Northern corn belt, commodity futures traded mostly lower at the CME Group in Chicago Monday.

Naomi Blohm, a senior market advisor with Stewart-Peterson, sitting down with AgDay TV host Clinton Griffiths says she's watching indices beyond core ag for movement. 

"I think that's going to be one of the main means of movement for agricultural commodities," says Blohm.  "When the funds come in and buy, they like to buy bushel baskets of commodities."

One indicator is the U.S. dollar index which has influence over export sales.

"The dollar has gotten all the way down to 91 before seeing some short-term overhead resistance at 94," says Blohm. "I'm looking for that to stay between 91 and 94 for probably a few more weeks until we get a better idea of whether the Fed is going to raise interest rates."

In addition to the dollar, Blohm is keeping an eye on crude oil. 

"OPEC has been doing a good job collectively of behaving and everybody is cooperating in cutting production," says Blohm.  "We've seen crude oil stabilize because production overall is stabilizing."

However, Blohm says demand from China has been increasing substantially to near record levels.

"They're importing close to 8.5 million barrels a day," says Blohm.  "That's really helping with the surplus of supplies." 

Blohm believes crude oil will continue to work higher which could eventually spread into the corn market. 

"A third of the value of corn ethanol is tied to crude oil," says Blohm. 

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