CNS Canada — Corn and soybean futures on the Chicago Board of Trade continued to drift lower during the week ended Wednesday, but haven’t bottomed yet.
Terry Reilly, an analyst with Futures International in Chicago, said corn prices have another 40 cents per bushel to go before bottoming around the $3 per bushel range (all figures US$). Soybeans will likely move down into that $9-$9.25 per bushel range, he added.
Further weakness in both markets will likely be linked to harvest pressure as activities start to pick up.
“Over the next couple weeks we’re going to see normal to better than normal conditions across the U.S., which promotes harvesting,” Reilly noted.
Traders will continue to monitor weather conditions, harvest and yield reports and demand for U.S. crops going forward, though they will also start to focus on upcoming South American corn and soybean crops.
There have been recent reports of flooding in southern parts of Brazil and Argentina, but things seem to be settling down, Reilly said.
“With good rains that have occurred over the past three weeks in South America, it’s setting up the stage for plantings to go in, in a timely manner if weather starts to back up a little bit on rains,” he added.
It looks like there could be record supplies out of South America again this year, he noted, which would hurt prices for both corn and soybeans.
“Two years in a row of a bumper crop in South America is just lifting global ending stocks higher,” he said. “There’s only so much that China can import during the 2014-15 season, especially with some of their contractions in selected animal units.”
For soybeans, the market is going to shift to a carry market rather than a demand market globally over the next twelve months, which should keep prices in check and below five-year averages, according to Reilly.
— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.