CBOT weekly outlook: Corn, soy steady, watching harvest

CBOT December 2019 corn with Bollinger (20,2) bands, a gauge of market volatility. (Barchart)

MarketsFarm — Chicago Board of Trade soybean and corn futures moved off of nearby lows and generally trended higher following the U.S. Department of Agriculture’s supply/demand data released Thursday.

However, attention has shifted to the looming harvest, with rangebound activity expected barring a fresh outside influence.

“For this market to really move up, it will need another headline coming in,” said John Weyer, director of commercial hedging with Walsh Trading in Chicago. Both soybeans and corn would likely trade in a sideways pattern through the harvest period, he said.

“The only thing that could give it a big pop would be an early frost,” he said, noting soybean and corn seedings were delayed in the spring and the late development will leave crops more susceptible to any adversity.

While weather scares could provide support, he added that any perceived rallies will be sold off heading into the harvest.

From a chart perspective, corn faces nearby resistance around $3.75-$3.80 per bushel (all figures US$). “If we could get some closes above there, that would change things,” said Weyer, noting $4 was a possible target.

However, if nothing materializes to boost the corn market and values hold rangebound, he expected the market to flirt with the $3.55-$3.60 per bushel area.

The recent rally in crude oil, following drone attacks on Saudi Arabian production facilities over the weekend, has yet to work its way into the corn market, despite a possible rise in ethanol prices.

The fact that North America is now relatively self-sufficient with crude oil limited its influence on corn compared to years past, Weyer said.

While corn and soybeans may trade sideways, Weyer expected there was a possibility for larger moves in wheat as there are more factors at play in the crop.

“If you get a little bullish news in wheat, that’s a 40-cent move, but if you get a little bullish in corn, it might be six cents,” said Weyer.

Wheat is grown worldwide, and news out of Australia, Europe, Argentina or the Black Sea region is all followed closely.

Weyer said increased interest from Egypt was a supportive factor for wheat, as weakness in the U.S. dollar and issues with the Black Sea crop were bringing more attention to the U.S.

— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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