For those following the grain markets, how do you tease out seasonal lows or ticks lower versus bigger issues dragging on prices?
It’s not an easy distinction to make, says Chuck Penner, founder of Leftfield Commodity Research.
This time of year, as the calendar flips to summer and the crop potential gets measured week by week, there’s a natural downward drift in some markets, such as the oilseed complex of canola and soybeans. There’s also examples right now of markets that should be moving lower but aren’t, such as flax.
“Right now, the market doesn’t have problems in other markets to trade,” Penner says, as much of the growing regions of the world work their way through the crop. Watching for news of weather woes or production difficulties will be key.
For canola and soybean prices, Penner says that if the U.S. could get a handle on the stream of fake used cooking oil coming in and flooding the biofuel market, that could bump demand for canola seed moving to the U.S. and supports domestic crush too. That would be supportive to the oilseed complex, he says.
Penner says that as long as you don’t have old crop to sell, now is the time for patience, even if crop potential improves as the growing season progresses. In this cash market, waiting out the summer doldrums might be the smartest move.
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