CBOT weekly outlook: Corn, soy have room to decline further

(Lisa Guenther photo)

CNS Canada –– Soybeans and corn at the Chicago Board of Trade are likely to trend lower as traders focus on the U.S. dollar’s recent strength.

“This is a currency-driven market; we think the currency has moved too fast, too soon,” said Terry Reilly of Futures International, LLC.

The U.S. dollar moved to a fresh 14-year-high against a bundle of currencies on Wednesday, which makes the country’s commodities less appealing to international buyers.

Gains in the U.S. dollar are affecting commodity inflows and outflows of money, which pressures agricultural markets, Reilly added.

Since last week, soybeans lost 5.25 cents per bushel in the January contract, closing at $9.8575 on Wednesday (all figures US$).

Outside of currency influences, investors are watching to see if South American countries will finish seeding soybeans in a timely manner, which could also pressure the market.

Brazil is nearing completion, while Argentina is expected to see drying weather in the next few days after rainfall temporarily stalled progress, Reilly said.

“But we’ve got big crops, which translates to big demand,” he said, which could limit some of the market’s losses.

Since last week, corn prices have lost 2.25 cents per bushel in the December contract, closing at $3.385.

“I think corn will still trend a little bit lower,” Reilly said.

U.S. exports are off to a slower start than traders had anticipated, he added.

China is expected to have bought increased amounts of sorghum due to complications transporting corn, which could also pressure the market in coming sessions.

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

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