MarketsFarm — Corn, wheat and soybeans were all trading on a positive note at the Chicago Board of Trade (CBOT) just days before the winter holidays.
According to Scott Capinegro, a broker for Barrington Commodity Brokers at Lake Barrington, Ill., a greater appetite for risk by investors and inclement weather have both supported the markets.
“(Investors are) adding more risk on the funds,” he said. “Plus as long as South America has a little bit of weather problems, we’re putting more weather premiums into the market.”
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While the March corn contract was trading just a few cents above $6 per bushel, Capinegro believes the price can go up to $6.29/bu. over the next few weeks (all figures US$).
“We also have a (U.S. Department of Agriculture) report coming in January…It’s going to need continued weather from Brazil to maintain itself,” Capinegro said, adding that the spread of the Omicron COVID-19 variant also brings a supportive “if” factor.
“Seasonally, this Christmas time period, the first week of January, we’re usually working our way higher, and so far it’s working.”
As COVID-19, extreme weather and supply chain disruptions forced their ways upon the markets in 2021, commodity prices remained elevated throughout most of the year. Capinegro cautioned that the same support seen in 2021 may not be in full force in 2022.
“I think we have to be very careful. There have been many years when we’ve come back and started a new year in January and those prices were year-highs,” he said.
“So we have to be very careful in watching market action, especially if (South America) sees a little bit of rain, it will stop crop conditions going down any further.”
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
