Rapidly approaching new-crop harvest weighs on already over-stocked markets

Corn is king in the commodity markets, and right now there’s probably more than a few farmers who wish the king would abdicate the throne.

If fund buying is an indicator of upside potential, there’s most certainly not much reason to be bullish with corn, says Wendy White, manager of grain marketing for Viterra’s central region.

The trouble is two-fold: there’s more than enough corn supply, with another big crop on its way with the 2020 harvest, and the demand picture for nearly all commodities — corn included — is still murky, as economies work their way out of the COVID-19 shutdowns.

White says that there are only two things that may briefly offer support to corn prices, and that would be significant weather concerns or reports of China committing to big purchases. Even then, any uptick would likely be short-lived, says White, as there are “burdensome” supplies of so many of the commodities, not just corn.

Some farmers may be watching the stock and equity markets bounding back and expecting commodity markets to do the same, but White says that’s not necessarily going to happen. “Money is trying to find the best place to make money right now,” she says, and grain prices have been creeping lower, even with the equity markets moving higher.

For Western Canada specifically, White says there may be some opportunities in the next three to four weeks to move some grain, as railways are looking for product to move and the grain pipeline is a little dry. There is still plenty of canola on-farm, White says, and farmers seem unwilling to move it. The caution there is that within a few months, new crop will begin rolling in putting downward pressure on prices.

Harvest has already begun in the southern U.S., and Ukraine as well, so globally harvest has begun, and that means eventually that new crop comes online, she says.

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