Wheat futures increased on April 23 as weather-related risks supported prices, while corn and soybeans traded with less momentum, according to market analysts. Livestock markets were also lower during early Thursday trading.
The shift in wheat prices is attributed to ongoing concerns about crop conditions. Darin Newsom, senior market analyst with Barchart, said, “Given what we’ve seen this spring where the winter crops never really went into a full dormancy…then get hit by a March freeze, it grows again, gets hit by an April freeze and so on. So based on all of that and the fact that the drought readings across the Plains continue to worsen, then we could say…what we’re seeing here is likely a result of building some weather premium in.”
Despite these premiums for wheat due to adverse weather, Newsom said there is no significant supply concern at present: “The reality is if we look at the future spreads, we’re not seeing the commercial side of the market react like we’ve got a supply and demand scare anywhere on the horizon for both hard red winter or soft red winter.” He added that speculators find wheat attractive under current conditions.
Corn markets have been steady as farmer selling slows during planting season. Newsom explained that basis has firmed but overall supplies remain ample: “We have seen the cash market pick up a little bit as sales have slowed and demand still is out there…the market’s still running below those levels. So we know overall national average basis is weak.” Meanwhile, soybean and bean oil futures weakened after technical signals prompted selling activity among traders.
Looking ahead, inflation remains a key factor influencing commodity markets. Newsom said higher input costs could impact future planting decisions: “But the commercial side of these markets will certainly take it into account…if more acres are going over to soybeans at a time when there’s serious doubt about global demand for U.S. soybeans…we’re going to see more carry being built into this soybean spreads.”
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Newsom concluded that interest rates are unlikely to change soon due in part to ongoing inflation fears: “Yeah, the inflation fears probably have put any idea of a rate cut on hold for the time being…Nothing really expected to change. We’re also going…except for…the fact that we’ll have a new chair theoretically.”
