Rising oil prices are making a big splash for the grain markets this week.
When OPEC+ surprisingly cut their target output by 1.16 million barrels per day, it gave crude oil futures the spark to trade over $4/barrel higher April 3, pulling corn and soybeans upwards as well, said Bryant Sanderson of CHS Hedging.
The oil price surge is having a dramatic effect on soybeans, especially on soybean oil. It is pulling corn prices higher as well, said Jack Scoville of Price Futures Group. The impact of the higher oil prices on ethanol demand is bringing corn prices along for the ride.
What’s happening with crude oil prices will likely continue to make headlines this week, Scoville said.
Currently export corn demand also continues to improve, he said.
A daily export sale announcement to Mexico
on March 3 of 150,000 tons day for the 2023-24 marketing year is part of the almost daily announcement of U.S. corn exports right now, Sanderson said.
On the Russian export scene, Louis Dreyfus became the third grain exporter to announce it will stop exporting Russian grain starting July 1, Sanderson said.
Last week, Reuters reported Viterra, part-owned by Switzerland-based mining and trading giant Glencore announced it will stop its origination and export programs out of Russia. The Reuters article noted that Viterra’s announcement came only one day after rival Cargill said it would take a further step back from the Russian grain market, said Keith Good with the University of Illinois’ farmdoc daily in his export analysis.
“Russia’s agriculture ministry said in a separate statement that Viterra’s decision will not affect the amount of Russia’s grain exports,” said Good, farm policy news editor for the farmdoc project.
Further, Bloomberg reported, “Archer-Daniels- Midland Co. is weighing options to exit its main Russian operations, potentially adding to the list of Western agriculture traders pulling back from the world’s top wheat exporter,” Good said.
“ADM’s possible move comes as rivals Cargill Inc. and Glencore-backed Viterra, the two biggest Western exporters of Russian grain, pull back from the market. The shift will give local firms and Moscow more control over the nation’s vast food resources,” Good said.
Watching export demand is going to be big overall for both corn and soybeans, Scoville said.