La Nina has ripple effect on Illinois commodity markets

La Nina is forming in the equatorial Pacific Ocean, and the unpredictable ocean-atmosphere phenomenon is causing similar uncertain in commodity markets in Illinois and around the world.

Dale Durchholz, senior market analyst for Agrivisor LLC, said some markets could feel the pinch more than others and cautioned that Illinois farmers need to pay close attention to how La Nina impacts crop production in South America.

“The biggest issue Illinois farmers really need to gear up for if La Nina does become entrenched is starting to monitor what the weather is doing in South America more diligently and how the weather system impacts crops there over the next few months,” Durchholz said. “Use that information to adjust or make changes in your marketing policy that you’ve put in place for the corn, soybeans and even the wheat you’re raising.”

The southern continent’s growing season is getting underway, and La Nina could have a real impact on pricing for corn, soybeans and, to a lesser extent, wheat, according to Durchholz.

“All the focus right now from a production standpoint shifts to watching what is happening down there and what it means for the size of their crops and how that impacts the competition they present to us and to world trade,” Durrchholz said.

If La Nina interrupts grain production, consumers could end up paying more the next time they head to the grocery store to buy meat.

“If we do have weather problems down in South America, and we see corn and soybean prices move upward, that means livestock producers are paying more for feed,” Durrchholz said.

La Nina is associated with wetter and cooler weather in the northern parts of the United States and hot, dry conditions in the south.

Colder weather could adversely affect grain prices and therefore impact the livestock industry. The cost to feed livestock will trickle down to consumers, according to Durchholz.

“That impacts the rate of gain in livestock and in the short term tightens up the supply of meat coming into the marketplace, so we could see higher meat prices even quicker because of the winter weather,” Durrchholz said.

According to the Weather Channel, La Nina conditions are expected to last through early 2018.

–Illinois News Network

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