Dry weather in several parts of the globe are helping support U.S. grain prices. There’s also a lot of demand the U.S. has been seeing from export sales reports. But how much of this market is purely demand driven or is getting support from a weather premium?
“It’s hard to tell right now, but the first really good blanket of rain we get in Brazil will actually tell us how much weather premium is built into soybeans,” said Rick Hollister, grain merchant with The Andersons. “A really good demand market will always lead with the front month, which this one certainly has. That would say there’s less weather premium than maybe we’ve seen otherwise.”
Hollister said that usually there’s a concern about supply with weather, and “that’s what’s totally driving our markets.” He said this one is a little different because basis levels across the U.S. are improving and exports have been strong.
“We’ve got a full lineup at the Gulf loading soybeans—couldn’t hardly load another one if we had to in October, and November is filling up with ship loading,” he said. “We’re really seeing what that demand drive will do for us.”
Dry weather has been reported in South America, which has been delaying planting, and in the Black Sea region, tempering yields. Hollister said how much weather premium will build in the market is certainly an unknown.
Hollister talks about quick harvest progress and why farmers need to be managing risk heading into the election in his full comments in the player above.