However, weather may hurt the price, according to Rabobank’s Agri Commodity Market Research’s report.
The report, which looked at the USDA’s 12 August World Agricultural Supply and Demand Estimates (WASDE), said grains are currently “bearish,” with larger than expected stocks and higher yields, even with the market expecting a reduction.
Corn yields were raised by two bushels per acre, only slightly behind last year’s record as a whole. However, it warned there was a price risk that still remains in the crop, as there is “uneven development” of corn crops across the Midwest due to early season wetness across the area.
Watching the weather
The corn crop was up 4m metric tons globally due to good years in Brazil and Argentina, according to Agri Commodity Market Research. Even though it was up across the world, corn was down by about 3.5m metric tons.
The report said Chicago Board of Trade (CBOT) prices will be prone to weather over the next few weeks. Prices may reach a season low soon if the weather reports do not continue to remain favorable for the crop.
“Last year, for example, the USDA increased their yield forecast over the course of the growing season, but had to lower it once the harvest progressed and yields came in below the expectations,” according to the Agri Commodity Market Research report.
CBOT corn prices, released on Thursday (27 August), ended up seeing some great gains. CBOT said corn prices gained 5.5 cents to $3.66 for three-fourths of a bushel in September.
The global supply of wheat is currently “neutral,” according to the Rabobank report. There are adequate supplies on the market, meaning the stock had increased, but there is a lack of export demands.
“On the global export market US wheat is not competitive, and thus the USA reduced their 2015/16 export estimates,” the report said.
Market analysts said an eye will be kept on the weather to where prices of wheat will go in the near future. The report said El Nino will be a factor to watch and could bring “drought stress” to Australia.
International Grain Council reports
A recent report from the International Grain Council (IGC) predicted the world production of wheat for 2015-16 will be posted by 10m tons to 720m tons. Global consumption will be up 5m because of a higher feed use.
Corn’s forecast was also up in the IGC’s report.
“Despite damage from drought in Europe, the world production forecast is increased by 2m [tons] from before, with US crop prospects more favorable,” the report said. “Given slightly tighter availabilities in some countries, overall consumption is forecast to dip slightly, to 972m [tons], with feed use down 1% [year over year].”