Corn and soybean markets are all about supply right now, while wheat markets are waiting on demand news to find some strength. The persistent dry bias for huge areas of the U.S. and Western Canada are definitely impacting grain markets.
That’s according to Darin Newsom, senior market analyst at Barchart. The current weather market has lost some steam after kicking off a little earlier than usual, based on planting conditions.
“We’re in week five of what’s usually a six-week reversal pattern,” Newsome says. “Producers can pick and choose if they want to sell a little bit more, and use this rally to their advantage. Then again, I wouldn’t do it all, because again, we have no idea how high this market might want to go again.”
The trouble with weather markets is small rain events or improving weather patterns can quickly change the dynamic.
“There’s possibility of some rain moving across the Midwest this coming weekend. So you know, any of these things could be the trigger that all of a sudden brings this to a halt. That’s just how weather markets act,” Newsome says (more below).
Grain markets aren’t all about weather right now, however, as wheat markets look to demand shifts to ignite some movement higher.
“What’s really been surprising here is that this whole [Russia-Ukraine] situation over in Europe in the Black Sea area hasn’t really done anything for the Chicago soft white winter wheat market wheat; the U.S. has not seen an increase in demand [and] wheat exports are still very slow,” he says.
He adds that there are still some concerns for hard red spring and hard red winter and there are questions as to how feed supplies will shake out and play a role in overall wheat demand.
Navigating a weather market is difficult, Newsom adds, and selling into a rally — if profitable — is a decent strategy, but there’s some upside potential which could influence some to hold back. The trick will be watching for the market topping out, which could happen quickly, depending on conditions.
Listen to the full discussion with Darin Newsom of Barchart, above!