MarketsFarm — While fears over the newly-identified Omicron COVID-19 variant caused a sharp downturn Friday in oil and equities, crop prices on the Chicago Board of Trade (CBOT) were not as hard hit.
“This new COVID-19 variant has got some traders spooked in the market here in thinking there might be some economic slowdown and possibly some shipping concerns,” said Terry Reilly, senior agricultural analyst for Chicago-based Futures International.
Prices have since stabilized, he added, given the presence of technical buying in outside markets led by crude oil, as well as rebounding equity markets in the U.S.
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“The bottom line is we may have been a little bit oversold (on Tuesday this week). We’re just seeing some yo-yo sessions, up and down, up and down,” he said. “Maybe the agriculture markets, in my opinion, are a bit more resilient.”
Exports of corn and soybeans to China have been slow as of late, according to Reilly, and he expects “wide two-sided trading” on the crop markets.
Reilly predicts the January soybean contract to trade anywhere between $12 and $12.80 per bushel and March corn between $5.55-$6/bu. in the short term (all figures US$).
Wheat markets have seen recent downward pressure after the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) on Monday reported a record crop of 34.4 million tonnes produced in that nation in 2020-21.
Australia’s canola and barley production this year were also projected to be their largest and second-largest on record, respectively.
Precipitation in the U.S. northern Plains, Brazil and Argentina also brought downward pressure on wheat markets. However, Reilly expects wheat prices to move upward very soon.
“After these large declines that we saw over the past two days, wheat prices may stabilize a little bit and may be higher over the short term because the global demand for high-protein wheat seems to be very good,” he said.
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
