IARN — As South American supplies begin to come on-line, a Price Futures Group market analyst says U.S. grain markets have morphed into a “supply bull” from a “demand bull.”
Senior account executive Bill Moore says South American supplies are cheaper than the U.S., which is cutting into the market share. However, problematic weather in South America is still an issue with northern Brazil being too wet for harvest and Argentina too dry for proper crop development.
“The market is kind of morphing into a little different kind of market right now than we had going back the last four or five months,” Moore said. “It’s kind of more of what I call a supply bull than a demand bull. We’ve been the only game in town for corn and beans for the longest time, but now South America is coming on-line as their harvest proceeds. Their corn and beans are a little cheaper than ours. They are cutting into our market share a little bit. We’re not as much of a bullish force export wise as we were a month or so back.”
Moore notes the attention will shift from old crop to new crop as there is no margin for error in the upcoming U.S. row crop season.
“We still have major issues with the supply,” Moore said. “South America is still tight. Also, we’ve got to look to the U.S. crop coming on-line this summer. We really need a good crop from the U.S. to replenish the supplies depleted by the South American La Nina and the record demand. If we don’t get them, then these prices will probably keep going higher from here.”
Moore says U.S. stocks have reached 6-7 year lows and desperately need to be replenished by an ample U.S. harvest. He expects the market to be sideways to up from now until early summer until we have a better handle on U.S. production and yield.
Article courtesy the Iowa Agribusiness Radio Network
