Keep an eye on China

What would it take for grain prices to become unhinged? I asked that question of a market analyst yesterday. Since I didn’t ask if he was willing to be quoted, the market analyst will remain anonymous, but his answer was interesting. Back in 2008, grain prices increased dramatically. Spring wheat on the Minneapolis Exchange briefly hit an amazing $25 a bushel and canola hit $750 a tonne. We’ve seen another bull run in recent months fueled by the Russian export ban and corn supplies being much tighter than expected. So what would it take for grain prices to repeat the 2008 excitement? The analyst thought for a minute and said that in the current crop year, supply prospects seem largely assured. However, if China were to enter the market and buy a large amount of corn, the market could get pretty wild. China has become a huge importer of soybeans – about 55 million tonnes this year. However, China has managed to avoid big imports of corn. If that changed, there would be a major market reaction. Next growing season, production prospects will again be a pivotal force in grain markets. Until then, any big market jolt would have to come from the demand side of the equation.

I’m Kevin Hursh.

DynAgra, an independent Western Canada-based Company, is dedicated to providing growers with the tools to manage the risk and maximize the profitability of their farm business through the continued innovation of agricultural products and services. We are committed to developing and providing growers with the latest in precision agronomics, variable rate technology, soil fertility, crop protection, fertilizers, custom application and financial solutions.