AVENTURA, FLA. — Domestically and globally, most grain and oilseed markets appear solidly bearish, but several underlying factors were keeping market “bulls” close at hand, said Stephen Nicholson, executive vice president and global sector strategist of grains and oilseeds for Rabobank, in a recent presentation at the International Sweetener Colloquium.

“Weather is an issue,” Nicholson told Colloquium attendees Feb. 28. “Across the US Corn Belt, we’re very dry. Our topsoil moisture conditions have improved, but there’s not much reserve, and we’re going to need timely rains.”

Referencing the currently planted US winter wheat crop, Nicholson said even though crop condition ratings were significantly improved from a year ago, there is still unease with the lack of snow cover this winter.

Besides dryness, Nicholson said the rising temperatures, especially hotter nighttime temperatures, may add stress to crops this summer. He said improved genetics are helping crops manage the daytime heat but crops still need an overnight respite from the extreme temperatures, which many are not expected to get. Additionally, the warmer temperatures are aiding the survivability of pests.  

Another area of concern, Nicholson said, is that while global grain stocks have rebounded, largely because of Brazil’s massive corn and soybean production in recent years, global wheat and rice stocks — the world’s major food grains — are continuing to contract. And history has shown that instances of food insecurity have the potential to spur communal unrest, which may solicit bullish market reactions, he noted.

The bulls certainly were activated when Russia invaded Ukraine in February 2022. And while the ongoing conflict between the two Black Sea nations has lost some of its bullish overtones, Nicholson said the war likely may have long-term implications for the global grains market overall. He said production areas in Ukraine, a longtime major grain exporter, are shrinking and may not be restored in our lifetime — or longer.