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World Economic Uncertainty May Keep Grain Prices Lower

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Jim Bower

The world grain stocks report from USDA last week showed a very tight supply of grain, but a slumping world economy may keep prices under pressure.  Less than ideal growing conditions in the US and several other parts of the world are keeping the world wide supply of grain at historically low levels.  While world grain stocks were increased in last week’s USDA World Supply and Demand report to 57056 million metric tons from last month’s 53.10, Jim Bower, with Bower Trading in Lafayette, told HAT on Friday, “If the economy continues to be lethargic and the growth rates continue to come down, that will have a negative influence on commodity prices in general.”

 

Bob Utterback

Bob Utterback, nationally known market analyst based in  Montgomery County, says the market is worried about the economic uncertainty both here at home and around the world, “Could we be moving into a deflationary phase in the first quarter of 2013?” He told the HAT Mid-day edition on Friday that many speculators are reluctant to buy the market right now because of the economic question marks. He said, if the world economy was stronger, Thursday’s USDA report would have produced limit up price moves in the grain futures market.

[audio:https://www.hoosieragtoday.com//wp-content/uploads//2012/10/worldgrainwrap.mp3|titles=World Grain report]

 

 

Both Bower and Utterback agree that farmers are turning bullish and may hold on to some of their newly harvested grain. “The bin doors are being shut,” said Utterback. “This will buy us some upside, but equally  it will produce some very strong basis levels in Indiana and across the Corn Belt.” He added that cash corn prices could approach $8.50 to $9.00 which will choke off demand, “I think it is going to be hard to get futures above $8.20.”