In the weeks following a surprisingly low figure in the corn acre estimates, prices haven’t reflected that possibly bullish news.
Corn markets closed the first week of April with losses as some traders believe the recent weather patterns in the Midwest may encourage more corn plantings, but others have doubts about that despite the oversold market.
“This might not be true as it is very expensive to plant corn and corn is considered unprofitable to plant right now,” said Jack Scoville, analyst with Price Futures Group.
Despite the potential lack of profitability, Scoville said those looking to add corn this year may be able to find some opportunity for sales in the next couple weeks.
“Futures are much lower than just a few months ago, and a short covering rally is increasingly expected and might start next week,” he said. “Basis levels have firmed a little bit in the U.S. as processors look for supplies amid tight farmer holding patterns.”
Soybeans also traded weaker to open April, with Brazilian pressure mounting on U.S. prices. South American producers are finding good export demand recently, with reports indicating that China has been a “very active buyer” of Brazilian soybeans, Scoville said.
“Ideas that South American production is taking demand from the U.S. have pressured futures lower,” Scoville said. “Basis levels in the U.S. are reported to be firming as processors look for supplies and farmers remain tight holders.”
International news has largely been affecting wheat prices recently, with Russian wheat exporters being held up at the moment.
“The reports indicate that the government is seeking more control of the exports and has made life very difficult on the private exporters in an effort to extract more sales and powers to the government,” he said. “Russia is the world’s largest exporter and sets the world price, and prices remain low.”
Due to Russia’s power in the wheat market, U.S. exports remain weak as Russia, Ukraine and the EU look to export a lot of wheat soon.