Oil Prices Continue to Impact the Grain Markets

While fears of coronavirus are grabbing the headlines, Utterback Marketing president Bob Utterback says the drop in crude oil prices continues to impact the grain markets. “Crude oil is breaking down to technical support. If crude oil goes as low as $10 a barrel, that would drive domestic producers to shut down production. That would have a direct impact on agriculture.” Utterback says ethanol demand is the driver. “We are experiencing ethanol demand destruction. Plants in the northern Corn Belt will likely shutdown before plants in the Midwest. As they shut down, basis will widen. The market is going to have to start curtailing supply creation and get prices cheap enough to create more demand. That process is painful.”