Corn and soybean prices finished Friday in the green again. The market momentum is a change from February’s decline on the CME. So, what changed to start March?
“Well, money flow,” says Brian Grete, editor of Pro Farmer. “At the end of February, the funds got out liquidated long positions in a big way. And with the flip of the calendar, which is often the case, they returned as buyers. We’ll see if it continues or not, but this is a money flow thing. It doesn’t have a whole lot to do with the fundamentals, to be honest with you.”
As Grete points out, the supply and demand scenario didn’t change in March. One factor that did fuel market chatter was the rumor that China came in to buy corn, soybeans and wheat. However, those buys were never confirmed by USDA’s daily or weekly export reports released this week.
“Those are still rumors at this point, and when you look at overall export demand going into next week’s USDA crop report, corn exports still 13% behind, inspections aren’t that much prettier,” says Sam Hudson of CornBelt Marketing. “And so I think we have to expect that we’re going to see another cut to demand next week, it’s really more of a matter of how much and when you look at the fact that we could be providing a bigger carry into next year.”
Hudson says in the meantime, the pace of Brazil’s harvest could have an influence on price. And considering the market is looking for some bullish factors to fuel the market daily, Grete points out the markets seem to be a little exhausted by the stories regarding Argentina’s dwindling crop.
“The demand side is a concern for corn and for wheat, obviously, and soybeans are doing a little bit better. But we need a bullish catalyst, the Argentine situation, the crops are small and getting smaller, I think the markets become kind of numb to that. If there’s going to be a short-term crop scare, it has to be something in Brazil, and the most likely there would be on the corn side of things. The Safrinha crop, or the second crop, was planted later and beyond the ideal window for a good portion of that. Now, hat doesn’t guarantee that the yields will be down. But it does increase the odds that you could face some sort of weather issue and lack of moisture as we get out of the rainy season down there.”
Grete says a weather issue with Brazil’s second crop isn’t something that would cause the markets to react in the coming week. If there is a weather issue in Brazil, he says it’s something that would impact the markets one or two months down the road.
