As the new year begins, the recent surges in the grain markets may stick around for a little while, according to Jack Scoville.
The Price Futures Group analyst said export numbers have been a nice surprise to close out 2020, and with uncertainty in the South American crop outlook, there might not be reason to drop prices anytime soon.
“That’s keeping the market pretty well buoyant,” Scoville said. “It’s the reason we’ve been active through the holidays.”
South American growing season weather, particularly in Argentina and Brazil, has been extremely dry so far, which is a major factor in soybeans reaching into the higher $12 levels to end the year. That should continue to support soybeans, and any further issues will start to boost corn prices right along with it, Scoville said.
“It will be a factor for beans until late winter or spring depending on what they actually produce,” Scoville said. “Corn could be a factor in the summer as well if they continue to have droughts.”
Right now, corn isn’t seeing quite the demand surge soybeans have as the COVID-19 pandemic continues. Many consumers are limiting travel this winter as holiday parties are minimized or canceled. That is continuing to hurt the ethanol market, despite vaccines starting to be distributed.
“The effects of the vaccine are going to take a while to be felt by the general populace,” Scoville said. “There are concerns because people are working less as well.”
From a trader point of view, Scoville said any major market retracements ahead of the January Supply and Demand report from the USDA will likely come from profit taking during the holiday season, but that isn’t out of the ordinary.
“That would be a normal thing to see happen,” Scoville said. “But with the weather and demand situations where they are, I think we have higher prices coming right into January.”