Grain and soybean markets have been very quiet this week, as the wait continues for Friday’s deluge of information. Crop production figures, quarterly grain stocks, and world supply and demand estimates will all be announced Friday morning.
Meanwhile, much interest is set on the Middle East, given recent events between the U.S. and Iran. Does that uncertainty impact ag markets? Or more specifically, can the uncertainty provide better pricing opportunities?
“It certainly can,” said AgriVisor’s Karl Setzer. “When the immediate confrontation started with the U.S. and Iran we saw gold spike higher. Actually, gold traded near seven-year highs. Because we see that flight to quality take place. Typically you see commodities go with that as you see this flight to quality, or safe-haven buying as it’s called.”
Setzer said we haven’t seen immediate impacts in corn and soybean markets this past week, but it certainly could happen if tensions continue.
“Investors want to own something that’s tangible, that they can put their hands on, and say we physically own this rather than a financial position,” he said.
John Payne at Daniels Trading in Chicago said large current world supplies may limit immediate pricing opportunities. “I think if we had a South American problem where global supply would be a little more in question, we could certainly see soybeans higher," he said.
One hindrance for selling grains stems from the currency weakness in other parts of the world, which makes U.S. goods even more expensive. Payne said that issue is improving.
“You’re seeing the demand for feed grains go up,” he said. “That is a function of a stronger Russian ruble, you’re seeing the market for cotton to go up, that’s the function of a strong yuan, and if you could get the Brazilian real to turn a little bit, I think the corn and soybean markets can rise on that.”