Maize climbed to US$5 a bushel and soybeans rallied for a sixth day, driving both crops to fresh six-year highs, as farmer protests and dry weather in South America threaten to further tighten supplies.
Grain markets surged in the past month on adverse weather and as some nations moved to restrict exports to ensure local supplies.
Argentina last week announced a temporary suspension on corn-export licenses, prompting farmers to plan a three-day January sales halt in protest. Dryness in the region has raised worries for maize and soy harvests, while top wheat shipper Russia will curb grain exports from mid-February to tame food inflation.
The supply concerns come at a time when China’s crop-buying spree and bets on an economic recovery are bringing commodities back in fashion. Feed-grain demand in the Asian nation is swelling as its massive hog industry rebuilds from a swine disease, and hedge funds have a near-record net-long position across agricultural markets.
“The dangers to global corn production are clear and present,” Rabobank analysts including Stefan Vogel wrote in a note. “Argentine and Southern Brazil crops are advancing into a moisture-intensive stage amid dryness and only intermittent rainfall expected. Yield reductions will heap pressure on a nearly maxed-out US export programme.”
March corn futures rose as much as 2.2 percent in Chicago, with the most-active contract exceeding US$5 a bushel for the first time since May 2014. Soybean futures gained 1.8 percent to US$13.715 a bushel and wheat added 0.8 percent.
Farmer groups in Argentina, the world’s third-largest corn exporter and the top shipper of soy products, intend to stop grain sales from January 11-13 to show their opposition to the government’s corn-export suspension, a move designed to protect domestic supplies.
Growers are concerned the export halt could jeopardise Argentina’s reputation as a reliable supplier, Commerzbank AG analyst Carsten Fritsch said. Recent worker strikes there have also snarled crop shipments, with a backlog of more than 100 vessels last month.
For the next harvest, most of the country’s fields should stay dry through Saturday, while rain will aid soy crops in southern Brazil, according to Don Keeney, senior agricultural meteorologist at Maxar. StoneX cut slightly its soy-crop estimate for Brazil, citing December dryness in the nation’s top growing state. The United States is due to update its monthly global crop estimates next week.
“Weather issues, government intervention and strong export demand suggest the current commodity bull run has further to go in 2021,” Rabobank said.
by Megan Durisin, Bloomberg