CBOT corn following wheat higher, but upside limited

(Lisa Guenther photo)

CNS Canada — Corn futures on the Chicago Board of Trade closed higher on the week ending Wednesday, closing at US$3.6325 a bushel for September contracts.

“You could probably go back about a month now and look at wheat charts and the corn charts and we’ve been doing a good job of kind of going sideways with a little bit of a southerly drift to them,” said Brian Rydlund, a market analyst at CHS Hedging at St. Paul, Minn.

“But this wheat-covering now it might inspire a better trade here in the short-term. It’s helping corn out cause clearly those two are kind of related and kissing-cousins, and I think it’s helped the corn firm up here today but I don’t think it’s the beginning of a big move to the upside.

“I don’t think there is 50 cents or a dollar in wheat or corn to the upside. The fundamentals are still pretty heavy and pretty bearish,” he said.

There has been beneficial precipitation in the western U.S. Corn Belt in areas including South Dakota, Nebraska and Iowa, which is expected to move either south or east within the next few days.

“That’s exactly what the (soy)bean market needed,” said Rydlund. “Soybeans were weaker early and we’ve got a little rally going on today here, and I don’t think it’s the beginning of something huge to the upside.”

CBOT soybeans closed lower on the week ended Wednesday, with September contracts down to US$10.965 per bushel.

Soybeans will stay to the downside, Rydlund added, if the crop continues to progress amid bearish weather conditions.

The U.S. Department of Agriculture will release its August crop report on Tuesday (Aug. 12).

“Most of it is going to centre around the supply and demand part; yields on the corn and beans are expected to go up, crops get bigger,” said Rydlund. “I don’t imagine that the demand will change all that dramatically; they usually don’t this time of year. Bigger crops and good weather should mean a continual sideways-to-lower drift for most commodity prices in the short term.”

USDA estimates on yields have hovered around the 165 bushels per acre for corn, although traders’ “guesstimates” are close to a record yield in the upper 160s or 170 bushels per acre, Rydlund said.

“I think the trade feels that that’s inevitable, that it will eventually happen,” said Rydlund. “This (USDA report) is going to be based on Aug. 1 conditions and I think that would take into account a very good month of July for the corn market.

“The corn crop is pretty much made and now in the case of the upper Midwest and the Dakotas and Minnesota, we just have to get good finishing weather to get our crop to maturity.”

Traders will continue to look for beneficial weather conditions to help out the yields and provide a bearish tone for prices.

— Marney Blunt writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

 

 

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