CBOT weekly outlook: Corn and soybeans down after USDA report

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CNS Canada – Corn and soybean futures at the Chicago Board of Trade fell following the United States Department of Agriculture’s crop production report which raised corn estimates and kept soybeans at previous estimates.

“I expect the low volatility environment to continue with soybeans remaining in tight trading short term. And for corn prices eventually hit fresh contract lows,” said Terry Reilly, an analyst at Futures International.

During the week ended Nov. 9, the December corn contract fell slightly by seven cents to US$3.4125 per bushel. The dominant January contract for soybeans fell six cents to US$9.85 per bushel.

Corn production was raised two per cent from the October forecast to 14.6 billion bushels in the USDA report. Yields are expected to be at 175.4 bushels per acre.

“Well USDA took the corn yield up 3.6 bushels an acre, which is three bushels more than what the trade was looking for,” Reilly said.

The soybean forecast was lowered by less than one per cent from October estimates to 4.43 billion bushels. Yields are expected to average 49.5 bushels per acre, which is unchanged from October estimates.

“They left the soybean yield unchanged when many traders were looking for a downward revision,” Reilly said.

Reilly expects December corn contracts will trace down to the US$3.40 per bushel mark, while January soybeans will eventually be testing the US$9.80 per bushel mark.

“The corn stocks are up sharply from the previous month. While the soybean stocks are down only five million bushels, when traders were looking for a 10 million bushel reduction,” he said.

The USDA’s weekly crop progress report released Monday showed corn harvest was 70 per cent complete in the U.S. compared to the average of 83 per cent.

With the soybean harvest near complete the attention of traders is on South America where weather has hampered crop growth. Reilly said there isn’t any weather permeability built into the market, which is why soybean prices haven’t really been able to get off the ground.

“Any weather problems developing in Mato Grosso (Brazil), because soil moisture levels are short and also central Argentina, where we’re just seeing that drying over the next couple of weeks, could be a little bit supportive and limit some downside in prices,” Reilly said.

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

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