Feed weekly outlook: Falling futures suggest first cracks in lofty market

CBOT July 2021 corn (blue high/low/close) and CBOT July 2021 wheat (red HLC). (Barchart)

MarketsFarm — A sharp drop in corn and wheat futures prices at the Chicago Board of Trade over the past week could be the sign of the first cracks in the western Canadian feed grain market.

That said, tight supplies and uncertainty over new-crop grain production remain supportive.

“With the move on the futures market this week… it might be the first cracks of any significance we’ve seen in this market,” said Jim Beusekom of Market Place Commodities in Lethbridge.

Chicago Board of Trade corn and wheat futures have both posted large losses, with corn backing away from multi-year highs after a bearish reaction to the latest supply/demand estimates from the U.S. Department of Agriculture.

“The underlying futures market is down, so we would expect the cash market to follow,” Beusekom said, adding that the drop in futures was already showing up in the cash market with feed barley and wheat bids coming off of their highs.

However, feedlots are generally well covered for the time being, with most of their attention shifting to the new crop which will be harvested in 70-80 days.

Dryness concerns across much of the Prairies will keep all eyes on moisture conditions over the next two months.

“We’re in a weather market,” said Beusekom. A meaningful rain, especially in Saskatchewan and Manitoba, would change the situation, he added.

While most old-crop barley is already priced, “it will take a general rain across the Prairies before farmers move the last of their inventories.”

— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.

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