Hear
The summer months in the northern hemisphere (boreal summer), They usually become times of great variations in prices in Chicago. This is so since the corn and soybean crops are defined in the United States. In this sense, the flowering of the forage and the filling of grain in the oilseed generate logical uncertainty among operators about the future climate and the risks that this entails regarding the correct achievement of productions.
This year, it seems to be no different, especially if we take into account what happened with the floods in the south of Brazil that “force” that the harvests in the northern region of the planet have to be almost perfect.
The first customs with respect to the United States ends within normal parameters, not without some expectation since the abundant rains that the midwest received at the moment of maximum implementation sprint, Both corn and soybean activities were delayed by between 10% and 15%. For now, these precipitations generate a good start to the crops, but the most challenging thing is the forecasts made by the National Oceanic and Atmospheric Administration of the United States (NOAA) on May 16. In these climate predictions, NOAA foresees below-normal rainfall for the months of July, August and September for an important American productive region, with temperatures above average for the entire area that covers states such as Iowa, Illinois , Ohio, Indiana and Minnesota, which are clearly the most important.
Yes ok The United States Department of Agriculture (USDA) estimates record yields for both crops (something it usually does since it takes trend values), the pressure that American producers will have will be maximum to be able to achieve this, since drops of the order of 100 kilograms per hectare in soybeans could set off all the alarms if the USDA maintained the demand. In this sense, the stock/consumption ratio would go from just over 10% for the 2024/25 season to close to 7%.. In practical terms we would return to the 2022/23 campaign where oilseed prices comfortably exceeded $550 per ton. Although every year is different and the above should not be taken literally, it is simply an example.
From now on we are entering a season of turbulence in the grain market, which will also receive the impact of other exogenous factors that are currently in full development. Without a doubt, geopolitics will be the order of the day.
War conflicts in different regions of the globe and China’s veiled threats to Taiwan are escalating global tension. On the other hand, the definitions of the United States Federal Reserve on the future of interest rates in said country during the second half of the year will be key, as will the electoral definition of that country. In short, it seems that The traditional American “climate market” is going to extend a little longer over time due to other exogenous factors.. In these moments and regardless of how the day ends, an old colleague said “Stay Tuned” or what is the same as saying stay tuned.
The author is a partner of Nóvitas SA
