Grain and oilseed futures have dropped sharply over the last week, falling well off the summer highs set earlier in July.
Weather premiums are shrinking as growing conditions have improved, or at least stabilized, across much of Canada and the U.S. corn belt over the last three weeks, explains Dave Reimann, senior market analyst with Cargill, in the interview below.
“Even if you stabilize the yield estimates, it’s different than if you’re cutting them every day,” he notes.
Some analysts have attributed the decline in ag futures to the larger sell-off in the global commodity index, as U.S. crude oil prices reached a four-month low on Monday amid concerns about China’s economy.
“I tend to think this is still a bit more related to weather and growing conditions in the Northern Hemisphere, but there is no doubt the liquidation happening with these concerns about the global economy — you’ve seen pressure in gold and crude oil — that definitely does spill over into ag commodities as well,” says Reimann.
He also shares his thoughts on where the current slide might stop and whether the dryness in Alberta and Saskatchewan has been accounted for in canola and spring wheat futures: