Weekly Summary of CRM Agri Analysis & Forecasts
It isn’t just basic supply and demand factors, such as crop size and mill consumption, which determine grain prices.
External markets have a big say too, as has been underlined, for instance, by the fall in crude oil prices, which set fresh five-month lows this week. This weakness has weighed on values of the likes of vegetable oils, which are used largely in making biodiesel, and kept prices of oilseeds themselves, notably rapeseed, in check too.
This week has also brought a reminder of the influence of currency markets. The dollar has accelerated its decline, sliding to a four-month low against a basket of currencies, after the chairman of the Federal Reserve, Jerome Powell signalled the potential for US interest rate cuts ahead.
A weaker dollar, while improving the competitiveness of US exports, weighs on values in rival origins, such as Europe, where prices must dip in local currency terms to maintain the same dollar value.
This is one reason why March-24 Chicago wheat futures are up 10% from late-November lows, but Paris March-24 futures only 1.4% higher.
The important external market dynamics which affect grain markets are discussed in greater depth in the December edition of CRM Agri’s Global Agricultural Economic Outlook, as published this week.
Meanwhile, supply and demand factors influencing prices, such as the rash of orders of US wheat by Chinese importers taking advantage of low prices, are analysed in CRM Agri’s Global Grain Outlook.
Global Grain Outlook also analyses issues such as the wheat export market competition, worries over Brazil’s corn and soybean crops and improved ideas of Australian and Canadian rapeseed output, as well giving forecasts for prices heading into 2024.