U.S. crop prices may rebound from recent lows as demand outpaces available supplies, said Mike O’Dea, a risk management consultant at INTL FCStone Inc.
U.S. farmers may harvest about 84.8 million acres of corn, less than the Department of Agriculture’s estimate of 87.7 million acres, as drought ruined fields and spurred more crop abandonment, O’Dea said in an interview in London today. Corn prices have declined 12 percent on the Chicago Board of Trade since drought concerns drove them to a record $8.49 a bushel on Aug. 10. Prices may recover while remaining below record levels, O’Dea said.
Soybeans have dropped 16 percent since reaching a record $17.89 a bushel on Sept. 4, as the outlook for U.S. production improved while the U.S. government estimated that farmers in Brazil and Argentina will harvest record crops in the upcoming season. “Logistical issues” may still limit South America’s ability to boost exports while it’s too early in the region’s production season to rule out weather risks, O’Dea said.
“Bean prices at these levels are too low because they’re encouraging more demand,” said Kansas City, Missouri-based O’Dea, who spoke today at the U.K. Agriculture and Horticulture Development Board’s grain outlook conference in London. “Bean prices will rally over time. I don’t know if we’ll make new highs, but if you get a sniff of bad weather in South America these things will explode to the upside.”
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