The two V-words are getting a lot of attention during harvest season. Variability in yields is the norm in early reports, and volatility in the markets is here for the foreseeable future.
It is a time of year where USDA supply and demand and crop production reports combine with crop ratings reports and yield data to impact market direction. With wide swings in other markets the dynamic has shifted somewhat.
“I think harvest is going to get overshadowed by the by the macro markets and the money flow and this is an era where we’re very headline driven,” says Arlan Suderman at StoneX. “Perhaps USDA will be able to shock us one way or the other on October 12,”
Brian Basting at Advance Trading points to the dollar value and the stock market as major players this fall.
“The dollar is at a 20 year high,” he explained. “So obviously that make our exports of all crops, of any commodity more expensive to a foreign buyer. That is negative to the market and obviously there are ongoing concerns here about the equity market slipping back again and concerns about the recession possibility as we wrap up 2022-23. That’s impossible to predict at this point, but all those things are leaning more towards the negative side. So, it’s a fascinating environment.”
Basting says it can all lead to historical levels of volatility.
“Because it’s not just supply and demand of corn and beans and wheat. It is the outside markets, and I didn’t even mention the Black Sea situation, what’s going on with Ukraine and Russia in terms of their corn exports and wheat exports, the export corridor. I believe the agreement is set to expire about November 20th. Will that be renewed? Will that agreement even survive to November 20th? No one knows. And so that’s a huge influence and we have not even mentioned as we get into our corn harvest, South American weather. It is crucial now that we get a big corn and bean harvest in Brazil and Argentina here the next six months or so.”
He says that is far from a given as they just begin planting there.
