?Perfect storm? for grain futures, market analyst says

by | May 5, 2021 | 5 Ag Stories, News

Grain markets have continued their surge this week and a market analyst in Chicago says it?s all because of what he calls a ?perfect storm.?

Bill Moore is a senior account executive and author of The AgMaster Report for Price Futures Group. He tells the Iowa Agribusiness Radio Network that when you combine a ?flash drought? in Brazil with cold, dry climates in the central US and throw in 6 year-low ending stocks ? both here in the US & globally ? you have the recipe for an explosive upside market.

?It?s really a perfect storm for the corn and why it?s up here,? said Moore. ?The main reason is the flash drought in Brazil, which has really had a dry period. They say it?s the driest in decades for this second corn crop down there. Safrinha corn they call it. They could lose upwards of 10-12 million metric tons and that will turn directly into US exports and tighter stocks for us. That?s a positive. If they don?t get some rain in the next couple of weeks it?s going to maybe be more of a loss than that.?

Moore says a second factor is what he calls a very strong cash market in the US.

?I talk to my customers on a regular basis and nobody has any corn left,? said Moore. ?The market tries to get corn out of the bin by going up and there?s not much to get out. The basis is like 40-50 cents over the futures. These exporters and end users are scrambling for product that isn?t there. That?s as big of story as anything lately with why the corn has taken over leadership. May corn got over $7.50. That?s only about a buck off the all-time high from 2012.?

Moore notes another positive influence on the corn markets this week was Monday?s weekly export inspections report which showed over 2 million metric tons for corn.