MarketsFarm — Commodity prices on the Chicago Board of Trade (CBOT) were certainly affected by the U.S. Department of Agriculture’s (USDA) monthly supply/demand estimates released last Friday — but may be shaken again after the U.S. Federal Reserve decided to raise its key interest rate by 0.75 of a point.
Ryan Ettner, a commodity broker for Allendale Inc. at McHenry, Ill., said soybeans were seeing a large selloff while corn and wheat were trading sideways for the most part during the past week.
“The soybeans have pre-bought last week’s USDA report…(Buyers) were looking for one incredible report. Even though carryout was lowered, it was not lowered as much as pre-buyers had expected,” he said.
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“The USDA report would have suggested corn would be lower, along with (an improving) good-to-excellent rating, but heat in the forecast is preventing (the price) from going lower and instead is going sideways.”
Wheat, he added, was “in the same boat” as corn, with spring wheat seeding near complete and the hard red winter wheat harvest now underway.
The planting pace “was enough to limit some concern about how many acres would be switched to other crops or would not grow anything at all,” Ettner said, while the hard red wheat harvest “is underway and moving some of that weather-scare premium that was in that market, as well.”
Both the USDA report and above-normal temperatures in the forecast have had equal effects on crop prices, he observed — but the relative equilibrium created by both can be disrupted by the Fed’s decision, which marks the largest interest rate hike since 1994.
“I think a lot of markets are in wait-and-see mode,” he said. “0.75 of a point would have the least effect because it’s already been pre-bought and factored in.”
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
