CBOT weekly outlook: Corn, soy both watching weather, funds

(Lisa Guenther photo)

CNS Canada — Chicago Board of Trade soybeans recorded losses during the week ended Wednesday.

The market felt pressure from wet weather in the U.S. Midwest, which is expected to mitigate some of the damage caused by hot and dry conditions. As well, traders liquidated many of their long-term contracts.

“We’re going to watch the weekly (U.S. Department of Agriculture) export sales report on Thursday (June 23) to see if additional, non-traditional buyers come in to snap up soybeans, soyoil and corn,” said Terry Reilly of Futures International in Chicago.

The front-month July contract hit its highest point since the summer of 2014 before running into resistance.

Many traders are now exiting that month before it expires. However, Reilly said some of the more deferred values should be quite active in the coming days.

“We think (the September contract) will remain in a $10.75 to $11.40 per bushel trading range over the next one to two weeks,” said Reilly (all figures US$).

Improvement in the weather forecast and a minimal decline in U.S. soybean conditions should keep the market in check, he said. “We’re going to see choppy trade in the beans.”

Corn came off its lofty highs in a big way, losing a staggering 36 cents per bushel in one week due to a massive fund liquidation, kickstarted by speculators shedding their long contracts.

“What really got into the market over the past couple of weeks was the hot and dry forecast that traders went home with on Friday (June 17),” Reilly said.

“When they (got to) work on Monday the weather outlook significantly improved, so it’s a weather story.”

He pegged the September contract between $3.80 and $4.20 per bushel moving forward.

At the same time he said the $4 mark remains a vital technical support level. “If we trade below that, we’ll see additional fund selling,” he said.

Corn exports from the U.S. have been reasonably strong so far, he said, and will remain an important factor going forward.

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

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