A new year means more activity in the markets, but the current news cycle shows that it may not be the best time to commit to buy or sell.
Don Roose, president and market analyst for US Commodities in West Des Moines, Iowa, said with South America’s harvest expectations flowing and export demand a major unknown, the best approach is a cautious approach. .
“I think you have to be careful with the market,” Roose said. “We are knocking on the door to the South American harvest and the pace of exports is starting to slow down as South America will resume it. Weather markets are very dangerous because they come and go very quickly.
Corn markets rallied in December amid major weather concerns in South America, but those feelings leveled off. Roose said weather rallies are a good time to buy, but they can be wiped out at any time. He takes wheat as an example.
“We just saw that in wheat, where it picked up in wet weather in Australia,” Roose said. “When we stopped we found the harvest was bigger and Argentina’s harvest was bigger, now we’re at $ 1.20 off. When you have high input costs, there is nothing worse than having prices under pressure.
The state of the market is also different at the start of 2022, Roose said. Corn and wheat are significantly higher than in January 2021, when the increases started. Producers and traders were not sure prices would continue to rise. With this year starting at a higher level and with China having a normal harvest, those increases may not be repeated.
Exports are a major point traders hope to learn more about in the USDA’s Jan. 12 supply and demand report. Figures of available harvests and expected export activity will be revealed, giving traders an up-to-date snapshot of what the future may hold for the U.S. harvests and how weather conditions have affected the South American season. .
“So far, the returns have been bigger than people thought,” Roose said. “Soybean exports and our ending stocks of beans are increasing, but is the government increasing the demand for ethanol? This is the big question. What is the government saying about the demand side of the market? “