With harvest fast approaching, one of the biggest concerns impacting grain prices is the lack of demand—as the USDA lowered demand estimates last week in their August report.
“You know, that’s a ‘cat-and-mouse game’ that we play this time of year, every year,” says Rick Hollister, Market Analyst and Consultant with The Andersons. Michigan Ag Today spoke with Hollister during AgroExpo this week near St. Johns in Clinton County, Michigan.
He says the lack of demand for both old-crop and new-crop corn and soybeans have been weighing down on the markets.
“This year in particular, the demand for old-crop faded early back in late June and the demand for new-crop just has not surfaced,” according to Hollister. “We’re really suffering from that lack of demand for our new-crop. With the new-crop ratings improving, now we have more bushels than we thought potentially.”
He says a number of grain buyers are likely holding off their purchases to see how much lower grain prices can get.
“That’s normal this time of year,” says Hollister. “We’re at the end of the old-crop demand and we’re not selling much more old-crop because there’s no time to get it loaded out before Sept. 1, which we consider now in our new-crop year. So, the end of the old-crop is here and people who are looking to buy new-crop—they’re just taking a little bit of a ‘hands-off and let’s see where this market goes’ approach. They’re asking, ‘Could I get it bought just a little bit cheaper if I wait for it a little bit more yet?’”
Hollister says that a number of factors are impacting demand.
“The U.S. Dollar has been working against us. That weaker dollar helps us with exports, but the U.S. dollar has strengthened and clawed back, so that doesn’t help us,” according to Hollister.
“We’ve also seen other people who are buying and turning to other suppliers outside the U.S. Will China be back in the market? They’re always the big swing. That’s always the one we’re looking for. Also, crop values in other places like South America are just that much cheaper than the U.S. and that makes it really tough for us to compete,” he says.
Hollister adds that improving weather conditions and higher crop ratings have also been a factor in driving grain prices lower.
Click below to hear C.J. Miller’s radio news report for Michigan Ag Today.