The markets open up at 8:30 a.m. CT after the holiday break. John Heinberg, market advisor with Total Farm Marketing, says there are a few key things to watch for in the new year. The first is money flow.
The pressure in the agriculture sector is due to money aggressively selling across commodities, he says. The fund position continues to grow, and are at the shortest they’ve been in three and a half years.
Heinberg says the short is happening for a variety of reasons. The first factor driving this event is the large supply of corn projected the U.S. and concerns regarding corn demand. Another factor is the anti-inflation mindset.
“We’ve seen inflation calm down, the action of the Fed, the loosening of the U.S. dollar, and those are things that are anti in terms of commodity price at this timeframe,” he explains.
Heinberg says the news cycle tends to drive selling pressure, such as war and weather. The forecast has improved in Brazil over the weekend. But there are still areas that have lost production. But Brazil is a large country with planting and harvesting happening in different regions.
“There’s going to be a lot of pressure on price down the road, and that’s going to continue to make things difficult for the markets to really find some footing as long as we continue to struggle overall on the demand side,” he says.
On the short term, U.S. is offering the best deal on the global marketplace. But that could change fast for soybeans due to Argentina’s crop, Heinberg says.
“Soybeans can quickly fall apart here,” he warns. “We’re already seeing the impact on the soybean meal price with Argentina’s crop coming.”
What else will drive the market in 2024? Heinberg says the Jan. 12 production estimates will move corn prices. The March report that predicts planting acres will also affect the grain market for the entire summer.
