CBOT corn poised to drop below US$3/bu.

(Canada Beef Inc. photo)

CNS Canada — Chicago corn futures moved higher during the week ended Wednesday, but the U.S. Department of Agriculture’s monthly crop report, due Friday, has the potential to push values sharply lower, according to an analyst.

“Traders are looking for a three-point increase in the yield for the U.S. corn, and that could draw nearby corn down 15 to 20 cents per bushel over the next week, week and a half,” said Terry Reilly, senior commodity analyst with Futures International in Chicago (all figures US$). “Possibly, below US$3/bu. before we arrive at first notice day delivery for the December contract.”

In September, USDA pegged the 2014-15 US corn yield at 171.7 bu./ac. Pre-report expectations also call for the government agency to increase the soybean yield from last month’s estimate of 46.6 bu./ac.

If that happens, the November Chicago soybean future will likely drop below US$9/bu., potentially down to the US$8.75 per bushel level, erasing gains seen during the week ended Wednesday, Reilly added.

Fundamentally, everything is bearish for both CBOT (Chicago Board of Trade) corn and soybean futures, as production should be record-large for the crops in the U.S. and harvest is progressing, said Reilly.

For corn, the few bright spots are good domestic ethanol demand, as well as worries about wet conditions in some U.S. fields slowing harvest.

“Many producers are leaving their corn in the field in hopes that it dries down,” Reilly said. “The corn is not coming out of the field as fast as beans at the moment, and that’s just a touch supportive.”

Soybean futures may find support if problems arise for South American planting this fall, though acreage is expected to increase in the region.

“If the main (South American) growing regions don’t get rainfall over the next couple weeks, we’re going to see a delay in bean seeding down there, and that would just generally be supportive,” Reilly added.

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

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