CNS Canada — Soybean futures on the Chicago Board of Trade fell lower during the week ended Wednesday, as expectations of a record-large harvest in the U.S. pushed values below the US$10 per bushel level.
“I think going through US$10 futures in the November contract was very psychologically damaging,” said Brian Rydlund, a market analyst with CHS Hedging in St. Paul, Minn.
Out of the three major U.S. crops, soybeans have the most potential to sink even lower, he added. The next barriers on the downside could be at the US$9.20 or $9.25 level.
“The trend to me is still clearly down,” said Rydlund, adding a short position is building within the futures right now, but one he doubts is very big.
The international picture is also not favouring the market, he said, as large amounts of soybeans are expected to come out of South America.
“It certainly is going to weigh on prices if all these acres produce average yields, and in the case of the U.S., above-average yields,” he said, noting 60- to 90-bushel yields are starting to come out of the Mississippi Delta. Indiana and Missouri are also recording good yields, he said.
On Thursday, the U.S. Department of Agriculture is scheduled to release its crop supply and demand reports. Already, farmers are bracing for production numbers approaching four billion bushels.
With that in mind, Rydlund says it’s hard to see any potential rally points in the near future.
“You look at the fundamentals, whether it’s the U.S. or the world, they still look bearish to me,” he said.
CBOT corn futures were weaker during the week, also weighed down by the looming record harvest and improving weather conditions.
Earlier in the week, frost concerns for some northern areas of the U.S. corn belt were beginning to push values higher; however, the latest forecasts indicate temperatures will stay above the freezing mark.
“The market has really dismissed that and doesn’t feel there’s much threat there anymore, unlike last Friday when it was all the rage,” said Rydlund, adding the lowest projected temperatures he had seen recently were in the upper 30s F.
Despite the bearish weather and looming record harvest, he said he’s more optimistic about corn’s future than soybeans.
“I think corn and wheat are getting in the final stage of their bear moves,” he said, adding corn could also be the first commodity of the big three to recover.
Values will likely descend another 25 cents, he said, with spring and summer corn staying lower into the new year.
“Most of the dirty work is done,” said Rydlund, “if you go back and look at the charts. Most of the washout in (corn) prices already happened.”
— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.