The AgriPost
May 28, 2021
Grain, Feed, and Oilseed Prices Continue Volatility in a Weather Market By Harry Siemens
The grain and oilseed market kept climbing to record highs with canola reaching over $1,000 a tonne and wheat over $8 dollars a bushel but then dropped steadily
for a whole week before the long weekend. With prices still high Jonathan Driedger, V.P. LeftField Commodity Research of Grunthal, MB said, “Let’s call it a bit of a speculative
sugar rush in the futures market that pushes these futures markets higher, but it feels like cash markets are maybe left behind, which can be disappointing. That’s not the case this time around. We
see good basis levels, which all of that is just a reflection of how fundamentally tight these markets are, essentially for all crops.” Each crop has its own story in many ways, and yet all of them are connected. In many cases, farmers have booked too much in the way of crop sales, too early, or at least it may seem that way. And hindsight’s always a pretty harsh report card. “It’s always that if you sell too much, or you didn’t sell enough. In many ways, you try and make the best decisions you can for your business in the context of what you know at the moment. I’ll be the first to admit that we probably weren’t bullish enough early enough in light of what we have seen.” Corn continues to be the king in the marketplace because it is the largest crop, and it’s the single most influential crop. “In corn, there is phenomenal demand outside the US with the USDA forecasting record great demand.
And so we have the US ending stocks for the current crop year looking like they’re going to be the tightest in several years,” said Driedger. Driedger said looking ahead to a year that already seems as tight as it will be in the current year, if the weather is, say normal or reasonably good, and if the yields are not there, then it is like throwing more gasoline on the fire. With corn a tight crop situation, along with strong Chinese imports in the US this has drawn down their stocks. Dryness in Brazil is adding some heightened intensity more recently. So their crop is getting smaller in the market’s eyes, and the forecast is not great. This shifts more export demand to the US. “And so it’s, as these things often are, maybe a culmination of several different factors all blowing in the bullish direction and so we have just these phenomenal prices,” explained Driedger. In western Canada, the cash corn prices are vital because
this feed grade complex is tight. Barley, wheat, and feed wheat prices are high while not changing the broader futures market picture very much. “But locally that certainly adds a little extra dynamic to it,” said Driedger. “So multiple things, but this important corn market was robust, for sure.” Driedger said the dryness in spring has made the conversation turn into a weather market already. “And the fact that the markets were so tight for this current crop year and already projecting to be tight for this next season just put all that greater emphasis on yield and weather,” he said. “So there are weather premiums priced in early. I think it will be volatile here as we advance and both to the upside, but then maybe also the downside, because the market has priced a lot of good news. And that’s something that I think farmers will have to accept here as we advance. It’s both higher and lower,” he predicted.
Corn is king in grain and feed markets because it is the biggest crop. Scott McLean on April 27 said corn is marching right along but will be starting to look for a drink shortly. Submitted photo