MarketsFarm — Soybean and wheat prices on the Chicago Board of Trade (CBOT) rallied throughout the week, but may start to ease as spring plantings progress.
Terry Reilly, senior agriculture futures analyst for Futures International in Chicago, said India’s newly-implemented ban on wheat exports starting last Saturday due to a severe heat wave was the major reason for rallying wheat prices.
The ban was later modified Tuesday to allow outgoing shipments awaiting customs clearance as well as exports to Egypt.
Inclement weather in spring wheat-growing areas in North America has also had a hand in the recent rises.
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“Weather is obviously a major factor for spring plantings… There are a lot of people worried about supply issues across the globe. There was also unstable weather in France,” Reilly said. “But I think it was all kicked off by the India export ban.”
Recent interest in soybeans from China had raised prices for the crop, although the pace of corn and soybean plantings has been slower than normal this spring so far, he added.
From May 10 to 17, the July soybean contract rose 92 cents per bushel to as high as $16.8425 (all figures US$). The July Chicago wheat contract jumped $1.9125/bu., to $12.84, the Minneapolis spring wheat contract increased $1.9925/bu., to $14.1275, and the Kansas City hard red wheat contract moved up $2.0425/bu., to US$13.7925.
Nearby contracts for all three crops closed lower on Wednesday, with soybeans losing 15 cents, corn down 19 cents and wheat falling at least 43 cents. However, Reilly doesn’t expect a continued downfall in prices.
“We’re looking for a kind of a sideways, wide trading range for all three markets,” he said. “It’s really not known (if it will happen) until we hear from both India, if they continue to revise their policies on exports for wheat, and Indonesia whose palm oil exports (have been banned) since (April 22).”
How much planting progress can be made in the U.S. over the next few weeks will dictate where prices will go, according to Reilly.
“We have a lot to go in this growing season. So there is still a lot of uncertainty. I think some traders are discounting the new-crop changes the United States Department of Agriculture (USDA) provided (in its May 12 supply/demand estimates).
“We’ll see how the growing season goes. We had a good jump in planting progress in the U.S. for corn and beans and we expect a decent jump this week, as well. We have to catch up a little bit and that can weigh on prices in the short term.”
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
