MarketsFarm – Weather-related concerns and questions whether Ukrainian grain will be exported or not were front and centre for traders on the Chicago Board of Trade during the week ended July 26.
Ryan Ettner, a broker for Allendale Inc. in McHenry, Ill., said forecasts calling for a heat wave in much of the United States are providing support for soybean and corn prices. This comes at a critical time for soybeans as August is the most critical month for determining yields, according to Ettner.
“(The upcoming heat) has been rallying the beans and corn is not far behind,” he said.
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Putting pressure on corn prices, and especially wheat, has been the recent agreement between Russia, Ukraine, Turkey and the United Nations to allow Ukrainian grain exports to travel safely on the Black Sea. Despite Russia recently launching missiles toward Ukrainian grain ports, there are reports the first grain vessel could be on the water later this week.
“Any Ukrainian export story is a corn and wheat story,” Ettner said. “You’re seeing corn and wheat step away from the beans. For wheat, weather is not really much of a story anymore, but for corn, you think (there’s a) 25 per cent (effect). For beans, if you’re talking weather, it’s 75 per cent of a beans story.”
The U.S. Federal Reserve’s upcoming announcement on July 27 to raise its key interest rate, most likely by 75 basis points, could become a disruptive factor on commodity markets. However, Ettner believes the European Central Bank’s (ECB) 50-basis point rate hike on July 21 had more of an effect.
“The U.S. was raising rates, but the ECB was not. So as long as the U.S. was raising rates and they’re not, the dollar just continued to surge higher,” Ettner said. “It’s still a race between the two currencies and you might see the dollar go up a little bit, but maybe nowhere near as aggressive as it was…I’d say that was a larger factor than it was now.”
He added that the next two weeks will determine crop prices going forward.
“I would expect US$6 (per bushel) for corn and US$14 for (November) beans,” Ettner said.
