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Santa rally unlikely for grain prices

Santa rally unlikely for grain prices

Price increases in November may have ended the chances of a December rally, a commodity strategist said

By Diego Flammini
Staff Writer
Farms.com

Cash crop producers hoping for Santa Claus to bring them higher grain prices near the end of the year may not get what they’re asking for.

November price rallies saw soybeans inch towards $12 per bushel, wheat prices rose to more than $6 per bushel and corn prices touched $4.30 per bushel.

Those points may be as high as commodity prices go for the remainder of the year, said Moe Agostino, chief commodity strategist with Farms.com Risk Management.

“November’s performance may have stolen the party,” he said. “The month of December can be strong, but (commodities’) performance over the past four months says the easy money has been made, so it will be harder to rally from here.”

Weather in South America and demand for corn will be key drivers for crop prices moving forward, he added.

Heading into 2021, the Jan. 12 USDA crop report could have some positive numbers for farmers.

“The report could be another bullish surprise with lower yields and higher export usage,” Agostino said.

News outside of the ag sector could also affect grain prices.

COVID-19 vaccine prospects and the U.S. election results can help provide stability.

“Policy and trade are very important,” Agostino said. “So is a recovering global and U.S. economy.”

If farmers are thinking about selling grain now, Agostino suggests keeping some aside in case prices improve.

“If you need the money, manage the risk and reward gift,” he said. “But keep some bushels dry in the event prices head higher in 2021.”


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Argentina suspended agro-export taxes early this week, from 26%, to increase their US dollar reserves. It lasted for 3 days by which time Argentina raised $7 bil.
This came at the wrong time as the US & China are working towards agreeing to a trade deal. Cheap soybean supply from Argentina works against that objective as China does not now need immediate US soybean supply. They reportedly scooped up 35 cargoes of Argentine soybeans. China's soybean reserves are said to be 6 MMT.
The US also reportedly has agreed to provide financial aid to Argentina.
US corn YTD export sales for 25/26 at record highs, with no Chinese business.
Drought in the US Midwest remains in place & near-term weather outlook remains dry, leading to a dry crop finish.
"Safe Haven" commodity trade momentum picks up as gold goes to record high territory due to economic uncertainty, trade wars, and expectations another US Fed rate cut.
Headline news that India is looking to buy more US crude oil and work towards a US-India trade deal- US tariffs are now at 50%.
USDA Sept. Hogs & Pigs report shows more contraction rather than expansion- supportive for hog futures.