The news of a new COVID-19 variant put a scare into the grain markets last week as traders became concerned about future shutdowns in the economy. But despite that scare, the market continues to offer farmers high prices for corn and soybeans.
“The new variant got the market shook up last week,” says Karl Setzer, a market analyst for Agrivisor.
And he says the movement in and out of the market of the fund investors has pushed prices around a bit. Managed money is important to the market, but it generally is more about parking money for short periods than it is about long-term investing, he explains.
Because of that, it can cause slight shifts in the market to become a bit more dramatic, at least in the short term. Last week the latest COVID strain caused one of those sudden shifts.
But the bottom line is that prices for corn and soybeans remain strong, and the basis is also strong in most areas, meaning farmers still have excellent marketing opportunities.
“We’re sitting at pretty elevated levels,” Setzer says.
There is concern in farm country about increased input costs, and it is possible those high input costs will lead to more farmers planting soybeans instead of corn next spring, although it is far too early to tell if that will actually happen or how much the market will react to that trend if it does happen. It is possible the market may need to try to buy corn acres, Setzer says.
Right now, U.S. corn is relatively inexpensive compared to world prices, while U.S. soybeans are 70 cents higher than Brazilian soybeans. With the crop in the ground and the beginning of the South American harvest only a month or so away, that could put downward pressure on U.S. soybean prices.
Setzer says the market is telling farmers to sell in the cash market, and it is giving little incentive to store grain past next May. Prices are at profitable levels.