American grain futures collectively fell on March 5 for diverse reasons including a new soy harvest in Brazil.
Corn futures set for delivery in May slumped in Chicago on March 5, 2024 by 3 3/4 cents or 0.94%, to $4.26 a bushel. This followed a rebound to $4.3 per bushel a day earlier, which came as a result of temporary short covering.
Fears of market saturation by price-watching farmers who are keeping their corn in silos contributed to the most recent fall. As corn planting kicks off in the U.S. this March, farmers will be under pressure to sell stocks to reduce seasonal supply overlap. This could lower the prices further.
Like American corn, wheat has been no stranger to price turmoil in the past one week. After gaining 6.25 cents on March 4 to $5.64 per bushel, the grain shed 13 cents on the 5th, to end at $5.461/4 a bushel.
News of cheap grain from Russia, selling at $202 per tonne in the world market had a stunning effect on U.S.’ futures. Russia generously sold a part of its impressive harvest of 99 million tons to supplant low production in Europe.
Besides, Ukraine also reportedly shipped its final wheat consignment for the 2023-24 market year this first week of March. Though this may leave the world market hollow for a while, it has nevertheless created a surplus.
The one crop that is facing price odds bravely however, even with virtually no expected supply lows is soybean.
On March 5, the most active soy contract in Chicago lost only 6 cents, to sell at $11.49 a bushel. On the 4th, the best soybean contract had gained 3.75 cents or a 0.33% appreciation, to end at $11.55 per bushel.
One factor that will determine the price course of the oilseed is the U.S. Department of Agriculture (USDA)’s March 8 report. The department will determine if Brazil’s current harvest will impact world supplies. A Reuters analysis foresees a USDA downgrade of Brazil’s output to 152.28 million tonnes.
Still, this scaling down on Brazil’s production will have little cheer on price as South American supplies are already surplus.
Besides, China has been stocking soy imports and is planning to plant its own crop to be self-sufficient.
Thus, as grain futures fall Tuesday, expectations on whether they will rally hinge upon USDA’s Friday report. It may bring a surprise like it did in January.