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Stocks & Commodities V. 28:11 (62, 62): Futures For You by Carley Garner
Stocks & Commodities V. 28:11 (62, 62): Futures For You by Carley Garner
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Futures For You by Carley Garner
ABOUT GRAIN PRICES
What are some of the key fundamental forces behind grain prices?
Before we look at the details, it is important to be aware of the big picture: Grain futures react to macro global economic conditions along with micro growing environments in the primary growing regions of the US, South America, China, and India. This makes sense because grain futures traded on Cme Group are based primarily on crops grown in the regions but sold to overseas buyers.
Price pressures in the grain complex, similar to any other market, come from a nearly unlimited number of factors. However, to avoid analysis paralysis, traders will likely be better off narrowing their focus of research or, better yet, knowing where to go for reliable information:
US DOLLAR
The value of the dollar plays a role in grain valuation. This is because a stronger dollar creates an environment in which dollar-priced assets (including grains) seem expensive to foreign buyers. Accordingly, the demand for these expensive assets drops and often so does the price of grain. Conversely, a weak US currency enables domestic growers to market their inventory at more competitive prices, increasing demand for the products and eventually promoting higher grain prices.
ABOUT GRAIN PRICES
What are some of the key fundamental forces behind grain prices?
Before we look at the details, it is important to be aware of the big picture: Grain futures react to macro global economic conditions along with micro growing environments in the primary growing regions of the US, South America, China, and India. This makes sense because grain futures traded on Cme Group are based primarily on crops grown in the regions but sold to overseas buyers.
Price pressures in the grain complex, similar to any other market, come from a nearly unlimited number of factors. However, to avoid analysis paralysis, traders will likely be better off narrowing their focus of research or, better yet, knowing where to go for reliable information:
US DOLLAR
The value of the dollar plays a role in grain valuation. This is because a stronger dollar creates an environment in which dollar-priced assets (including grains) seem expensive to foreign buyers. Accordingly, the demand for these expensive assets drops and often so does the price of grain. Conversely, a weak US currency enables domestic growers to market their inventory at more competitive prices, increasing demand for the products and eventually promoting higher grain prices.
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