Grain markets surging to start planting season | Ag Business


After a week that saw grain markets surge, early indicators are for another week of good prices.

Grain prices were up double digits across the board to open the week of April 26, which fits with the market’s plan to encourage more acres and boost up supply, according to Don Roose, analyst with U.S. Commodities in West Des Moines, Iowa. High prices will lead to more crops planted, while also limiting the number of buyers who are willing to pay such high prices.

“We need to buy the right amount of acres,” Roose said. “We need to slow down demand, in other words, ration demand.”

Roose said the second corn crop in Brazil has also been a major concern, adding fuel to the price jumps. Drought has been prevalent in South America for nearly seven weeks, right in the critical pollination stage, which will limit yields overall.

“It’s one of the worst times to be dry and stay dry,” Roose said. “Trade is fearful the world supplies are going to tighten up and you are going to have to get the corn from some place.”

With limited corn, Roose said wheat is likely the substitute in the market, which has led to continued gains in those markets as well.

As prices continue to rise, farmers may be more encouraged to add acres. However, until planting is finished, the market will try to find ways to create incentives for additional crop, putting prices at historic highs.

“We are trying to do everything to slow down the demand on old crop,” Roose said. “We’ve got from now until the first of September to slow down usage and three to four weeks to buy the acres we need. The markets are not kidding around anymore. They are trying to get this done right now.”

Despite the current rising prices, Roose wants to warn farmers of the age-old adage of “what goes up must come down.”

“The same news that takes us up will eventually take us down,” he said. “It’s not raining, but it will rain. We don’t have the acres but we’ll get the acres. Exports are strong and now they are softer. We are at historically high prices.”

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