Pete is talking all things grains in today’s episode of Futures Measures.
Grains have suffered from many of the same global macroeconomic issues that affected metals, minerals and the energy market. This bear market in commodities now dates back to the highs in 2011.
Since a drought in 2012, which pushed grain prices to all-time highs. However after the highs in 2012 there has been a continued sell-off in the grain markets. Each year since then has yielded record inventories, pushing prices lower.
Pete dives into the intricacies of the grain products and there respective products. The soybean crush trade has followed soybeans in the selloff while the relationship of corn and ethanol is more complex. Ethanol is a gasoline substitute and typically trades at a $0.30 premium to gasoline. However the falling prices of oil may push ethanol, and by extension corn, lower.
Ultimately weather drives the prices of commodities, if we see a bad La Nina effect in the next year (which Pete discussed) we could see a rise in grains.