CBOT review: Corn underwhelms investors despite lower USDA projections

CNS Canada –– Chicago Board of Trade corn contracts saw some choppy activity during the week ended Wednesday, but finished with only small advances as the U.S. Department of Agriculture’s prediction, that corn stockpiles would be lower than expected, failed to impress traders.

“I think we saw a lot of positioning in this market,” said analyst Terry Reilly of Futures International in Chicago.

Despite the impact of the USDA report, Reilly said he believes the size of the Brazilian crop could be a stronger influence on futures because of its prevalence as an export crop. Ethanol has also flattened out recently, he says.

In the days ahead Reilly believes there could be more support for the market.

“I look for bull spreading given that export inspections have been very healthy and very strong over the past several weeks.”

According to reports, planting has been active in the Gulf Coast while it’s still a little too cool for much of the Midwest.

Soybeans end week on high

CBOT soybean contracts broke out of their range in a big way on Wednesday, ending on an eight-month high as USDA projected tighter supplies.

“I think the No. 1 thing we like is the bull spreads in soybeans and soybean meal given the demand and also USDA’s acknowledgement that exports are going to sharply exceed the (earlier) estimate,” said Reilly.

Wednesday’s supply/demand report, he said, is confirmation the season is going to be similar to last year, when tight supplies were realized during the summer months.

Reilly also isn’t sure USDA’s import projections of 65 million bushels will be tough to reach because Canada’s exports to the U.S. were frontloaded during the marketing year.

“That means supplies of soybeans out of Canada, if they do decide to export, will likely see selected locations, in the northern portions of the eastern belt.”

The bullish run on soybeans extended to soymeal as well. Soymeal futures ended nearly two per cent higher for the week ended Wednesday.

“I do look for meal to gain some ground back on soybean oil given that Argentine premiums are more than 200 points below the nearby CME contract for soybean oil,” said Reilly.

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

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