The short-term outlook for grain and oilseed prices is grim, but long-term prospects remain bullish, according to speakers at the Canadian Global Crops Symposium.
Oversupply and devalued currencies in key export nations will weigh down prices for the foreseeable future.
Europe’s euro is down about 25 percent against the U.S. dollar, the Brazilian real has fallen 35 percent and the Russian ruble has plummeted by 50 percent.
That means growers in those regions are experiencing phenomenal grain prices when sales made in U.S. dollars are converted back to their local currencies.
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“They’re inspired to sell,” said Carsten Bredin, vice-president of grain merchandising with Richardson International.
And they will be selling cheap. Russia recently forward sold some new crop wheat to Jordan for $205 per tonne freight on board at the Black Sea.
“They’re going to be pressing the market lower. It means lower values,” said Bredin.
Excess supply will also continue to drive prices lower, said Mike O’dea, risk management consultant with FCStone.
Wheat has a bearish carryout-to-use ratio of about 28 percent.
“Wheat prices are going to go down in my opinion,” he told delegates gathered in Saskatoon.
He believes corn futures are heading toward $3 per bushel if there is another good U.S. crop in 2015, although he pointed out that U.S. yields have historically declined after a record harvest.
The soybean carryout-to-use ratio is also bearish at 31 percent, which has O’dea predicting sub-$8 per bu. futures prices for the crop.
He advised growers to keep an eye on the July/November soybean futures spread, which is now at a 14 cent inverse. If it switches to a carry position, that is very bearish for soybean futures.
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