Current grain market dynamics require methodical pricing decisions

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The expulsion from Canada of a Chinese diplomat earlier this week could wreak havoc on grain exports… or not. What could happen with exports is concerning, yes, but there are much more concrete factors set to shape markets in the short term, says one analyst.

Ranulf Glanville with GrainFox says getting a better handle on U.S. winter wheat supplies, for one, could create brief pricing opportunities in the next few weeks.

“It’s widely expected that yields are going to be horrible in a lot of those key states, particularly Kansas,” Glanville says, “At some point, there is the potential that the news about the small U.S. hard winter wheat crop is simply in the market. And if the market can’t keep responding to lower and lower production guesses for the U.S. crop; that would be a warning signal in terms of the ability of those futures to keep rolling higher.”

Wheat is not typically the market driver, however, and the U.S. corn yield expectation is running very hot, but it’s very early in the season. “When I look at the corn market, the corn futures market, I start to wonder if it’s starting to discount a very strong U.S. yield number before it’s assured, that’s for sure.”

Glanville adds that these are the fundamentals that farmers can depend on to make sound pricing decisions, instead of buying and selling based on headlines.

“Whether it’s the weather, whether it’s opportunities to make sales while most other farmers are distracted with planting and field work, for example, whether it’s opportunities to pick away at new crop sales, where there are attractive opportunities available — I do think that in a general sense for farmers, trading headlines of the day is not the best idea. Instead… we want to focus our marketing decisions on fundamental factors, supply and demand for the various crops,” he says.

For the full discussion on the risk of China imposing trade sanctions, crop conditions, and the latest on the Black Sea region, listen/watch below, or download the podcast for later! 

 

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