By Carrie Muehling
BLOOMINGTON – Corn and soybean prices have experienced a strong start to 2015.
Reason for the support could include money being transferred from different sectors into commodities during the first full week of the calendar year and possibly a small weather premium based on conditions in parts of South America during critical time for their growing season.
“In general, those crops are off to a good start. I don’t want to give the impression that those crops are in bad shape at all,” said Brian Basting, commodity research analyst with Advance Trading.
Basting said the trade is anticipating key reports due out from the USDA on Jan. 12. There are mixed ideas about the final crop numbers for 2014. Some believe the harvest in the northern states was not quite as good as originally thought. There is also some uncertainty about harvested acreage, which may have been a bit overstated.
After those reports have been released, Basting said South American weather will again be front and center.
“A small percentage of Brazilian soybeans have been harvested with good yields,” said Basting. “Overall, the crop conditions here in the first week of January in both countries are good.”
That could still change late in the growing season if things turn hot and dry.
Basting said the carryout for both crops is increasing, which is a change from recent years. Soybeans at the conclusion of the 2013-14 crop year were historically tight at just under 100 million bushels. That number is projected to be over 400 million bushels for the current crop year. For corn, the carryout last year was around 1.26 billion bushels compared to the current two billion bushel estimate.
“In general, the trade is looking at building stocks, and historically, building stocks is a period of sideways to maybe lower price action. Having said that, of course, there are always surprises out there where there may be demand from China that would be a more bullish surprise or there could be bearish surprises, too,” said Basting.
He said livestock trends continue to be positive from a grain consumption standpoint as the recent Hogs and Pigs Report did show expansion when it comes to farrowing intentions. Pork producers are hoping for less impact from the PED virus than in 2014. All livestock sectors seem to be recovering.
Basting said the trade will continue to watch what is happening overseas in places like Russia and Ukraine. The collapse in the oil market will also likely have some effect on commodity markets.
Carrie Muehling can be reached at [email protected].
