MarketsFarm — Commodities on the Chicago Board of Trade (CBOT) have seen a counter-season rally, with a correction expected in the near future.
“Markets are definitely overbought,” said Scott Capinegro of Barrington Commodity Brokers in Barrington, Ill.
“It’s harvest and we’re still rallying.”
World weather conditions are part of the driving force behind the rally, with dry growing conditions in Ukraine and Russia propping up global wheat values. South American soybean planting has been similarly hampered by a lack of precipitation.
China purchasing soybeans has also been a driving force in markets. Recent data indicates China purchased 9.8 million tonnes of soybeans in September, with 1.17 million tonnes coming from the U.S.; China’s imports of Brazilian soybeans were up by over 50 per cent when compared to September of last year, buying 7.25 million tonnes total.
On Tuesday, the November soybean contract closed down by 5.5 cents at $10.82 per bushel, and Chicago wheat closed down four cents at US$6.15 per bushel in the December contract (all figures US$).
Capinegro said a correction could happen at any time, “which is healthy for markets,” as commodities traditionally experience a drop in November and a rally in December.
“November is for bears, December is for bulls,” he said.
— Marlo Glass reports for MarketsFarm from Winnipeg.