Posted on February, 16, 2022 at 09:12 am
Grain markets may have found their top for the moment.
Soybean contracts traded a hair over $16, leading to some significant profit taking to end the week of Feb. 11, Price Futures Group analyst Jack Scoville said. While resistance has emerged, Scoville said that is largely because prices are already so high. Overall, the market still looks bullish.
“It is possible that the market topped out on Thursday, at least for the short-term,” Scoville said. “The market had been supported by speculative buying in response to the WASDE report that showed increased domestic demand and unchanged production and export demand.”
Adding to the bullish nature of soybeans, South American weather continues to be detrimental to the crop. Hot and dry conditions persist for an already parched region, which should create more cuts in their overall production.
“Crop losses are becoming more and more of a reality for the soybean market right now,” he said.
Corn markets are also seeing boosts from the production issues in South America, as well as continued questions about acres in the U.S. There is still time ahead of official acreage estimates, but Scoville said the feel is still that fertilizer costs and other input availability will cause fewer corn acres.
In wheat, the market is still dealing with the global uncertainty surrounding the conflict between Russia and Ukraine. As tensions rise, concerns about potential exports out of that region are driving up prices in the U.S., as supply may become limited. Last week, the U.S. said Russia could invade Ukraine at any time, with the Ukrainian population expected to resist if military action is taken.
“Russia and Ukraine are both major wheat exporters, so the wheat market could be damaged,” Scoville said. “The USDA cut demand on the domestic and the export side again in its reports released on Wednesday. It increased U.S. ending stocks but cut world ending stocks due to reduced Middle East and North African production.”
Source: AgUpdate