Thursday, May 13, 2010

Many Factors Influence Wheat, Corn & Soybeans

According to University of Illinois agricultural economist Darrel Good, a large number of factors continue to exert some influence on the prices of wheat, corn and soybeans.

"A different factor appears to take the spotlight on an almost daily basis," Good said. "Some developments have been positive for crop prices, some negative. As a result, prices continue to be very choppy."

Over the past month, November 2010 soybean futures have traded in a $.65 range, December 2010 corn futures have varied by as much as $.28, and July 2010 Chicago Board of Trade wheat futures have been in a $.40 range.

Those ranges since March 1 have been much larger for December corn ($.48) and July wheat ($.75).

"Part of the fluctuation in crop prices has been associated with fluctuation in the financial markets, which in turn reflect fluctuations in expectations about economic recovery and the demand for commodities," Good said.

Excluding the extreme spike low of May 6, the Dow Jones Industrial Average has traded in an 800-point range over the past month.

"Domestic economic growth is under way, and more jobs than expected were created in April, but the unemployment rate remains very high," Good said. "Internationally, the financial collapse in Greece and growing concerns about Spain and Italy had negative impacts on equity markets. However, the weekend announcement of a debt relief package for financial troubled European countries was greeted with a sharp rebound in these markets."

Good said currency values have also been in play in the commodity markets to the extent that exchange rates are thought to influence commodity imports and exports.

The U.S. dollar index reached a recent low in December 2009 and increased by more than 10 percent into early May.

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