Reasons For Hope In Commodity Prices

For many months now, the doomsayers have ruled the day in agriculture. Too much supply with too little demand would keep commodity prices in the doldrums throughout 2016 and beyond, they said. “The outlook is bleak,” has been a common refrain during this time.

Advertisement

Top Articles
TFI: Phosphate and Potash Are Critical Minerals, Senate Bill to Solidify

Will recent rises in commodity prices last?

View Results

Loading ... Loading ...

But bleak has now turned to just a bit brighter. In the past week, U.S. corn export sales have surged 80% to their largest levels since 2012, according to USDA data. This has been spurred by a combination of increased demand for U.S. corn from Japan and worries over drier than normal growing conditions in Brazil. This has pushed corn futures to near $4 per bushel, up more than 2% from the start of April.

Likewise, soybean is also experiencing this same kind of price/demand jump. Right now, soybean prices have once again topped the $10 per bushel mark, up more than $1 in the past few weeks. Again, weather worries in Brazil is leading the uptick, coupled with higher than expected soybean demand from China. This means some growers might switch their planting intentions from corn to soybeans, with some observers predicting a 2 to 2.5 million acre shift could occur in the next few weeks.

Even if this is just a temporary situation, it does point out one fundamental truth for U.S. growers to keep in mind – no matter how the economic cycles for crops play out each year, the world will still ultimately want more food.

0
Advertisement