Will the U.S. plant over 95 million acres of corn? Will canola move unfettered into China? What about getting crop out of the Black Sea region? Will that be possible?
All of these questions and more are in the commodity pricing mix right now, and Neil Townsend, market analyst with GrainFox, says that investors are working through their risk tolerances when it comes to each factor.
Townsend says that market fundamentals, such as carryout volumes and predicted acres, are taking somewhat of a backseat to the news cycle-induced volatility. Does that mean prices should be higher for some crops? Sure, but “the price is the price, you don’t argue with the market,” Townsend says.
Right now, the market is signalling the U.S. farmer to plant more corn, but that doesn’t mean acreage will hit the 97 million mark as some have estimated.
Working through this week’s StatsCan acreage numbers, the canola acreage number of 21.6 million is likely a high water mark, Townsend says, as Canada navigates trade escalation with its two largest markets, the U.S. and China. Canadian growers do have more rotation options versus the American farmer, but Townsend doesn’t view the canola acreage number dropping much.
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