Corn moved above $5 this week on the back of some bullish reports from the U.S. Department of Agriculture, including the World Agriculture Supply and Demand Estimates report. Now the question is, how high can it go?
"There's not a lot of support or resistance to slow this thing down," said Randy Martinson of Martinson Ag Risk Management.
Especially if there is "a hiccup" in the weather in Argentina, corn could see prices rising to $5.50, Martinson and AgweekTV's Michelle Rook discussed on this week's Agweek Market Wrap, sponsored by Gateway Building Systems.
The WASDE report cut 2020 production by 3.8 bushels per acre — way more than expected, Martinson said.
"Nobody was anticipating that number to come in," he said.
The USDA also reduced some usage numbers for corn, including ethanol, but Martinson thinks they may have gone too far.
"Once the summer gets rolling, we're going to see a little more traveling, a little more driving," he said. That means more ethanol.
However, he said it does not appear that anyone is rationing demand, as the U.S. continues to make big sales, including 110,000 metric tons to Mexico on Friday.
The soybean market is likewise staying strong and has made it above the $14 mark. USDA reports appear to believe the U.S. will run out of soybeans to sell at some point, Martinson said, as news of export sales keep coming.
Rook pointed out that the high soybean price in 2014 was $15.26. Martinson said he could see the price in 2021 going back above $15, maybe to $15.40.
Wheat climbed higher this week, too, but Martinson feels wheat will continue to "come behind reluctantly" as corn and soybeans increase in price.
Meanwhile, the high grain prices are having a negative impact on the livestock markets, as are the continuing slow pace of vaccination for COVID-19. Martinson said more vaccination will move society closer to normal conditions, which would lead to an increase in demand for meat. As that moves farther into the year, the near-month livestock prices struggle while the farther off months are seeing higher prices.
"It's getting a little ugly for the cattle side of things," Martinson said.
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