CBOT weekly outlook: Bull still needs to be fed for corn, soy

(Lisa Guenther photo)

CNS Canada — Fund money pulled soybean and corn futures at the Chicago Board of Trade (CBOT) to their highest levels of the past year in recent weeks, but profit-taking at the highs tempered gains as traders look for more fundamental reasons to keep the rally going.

“It’s all about the weather, La Nina and when it arrives,” said Scott Capinegro, president of Barrington Commodity Brokers in Illinois.

If La Nina doesn’t materialize to bring hot and dry weather across the Midwest, he estimated the highs for the summer may already be in by the end of June.

“They say corn is growing like a weed right now,” said Capinegro, noting weather conditions have been relatively favourable, with good rains and warm temperatures.

“You know the saying ‘Feed the bull?’ My saying is ‘Feed the bull, but in 2016 the bull learned how to eat the bear.'”

Both corn and soybeans were oversold right now, he said, but at the same time, “if this heat develops the yields will come down.”

On the other side, if crop-damaging conditions don’t come, the inevitable crash will be large.

The U.S. Department of Agriculture releases its next acreage estimates on June 30, which could provide some nearby direction before attention returns to the weather.

General expectations heading into the USDA report are for corn area to be down from earlier intentions, and soybeans up.

With the technical trends still pointing higher for soybeans and corn, Capinegro said farmers should be selling into the gains.

Current new-crop pricing opportunities are profitable, he said, and “there’s no reason not be at least 30 per cent sold of new crop.”

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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