CBOT weekly outlook: Corn, soy struggle under heavy supplies

CNS Canada — Corn and soybean traders continue to assess the fallout from last week’s world supply and demand report from the U.S. Department of Agriculture.

The monthly report stunned analysts with predictions for U.S. corn yields at 169.5 bushels per acre, and soybean yields of 49.4 bu./ac.

“That just destroyed the market,” said Scott Capinegro at Highland Trading, referring to corn. “You’ve got the month of August here, there’s no heat, you’re catching rain in areas every day, which adds to the bearishness.”

With reports of crop conditions improving through most of the U.S. Corn Belt, he said, the chances for any kind of rally are slim.

Even if USDA was to cut its yield estimates in its September report to 166 bu./ac., which would never happen, it would still be too much corn, he said.

Terry Reilly, an analyst at Futures International, said corn yields could be pushed higher in September if current rains boost filling. That would add to downward pressure on prices.

“It’s all weather-driven right now,” he said.

The November soybean contract could be set back to lows witnessed in June, Reilly said, with strong support coming back into the market at $9.07/bu. (all figures US$).

During the week ended Wednesday, the most-active November contract lost 48 cents to end up at $9.2525/bu.

August is a critical time for soybean development as pods are filling and rain now falling in many soybean-growing areas will boost crop conditions, he said.

One factor helping to support soybean prices has been Chinese buying, he said, especially for the nearby September contract.

“There’s a lot of strong U.S. demand for both crushing and exports for soybeans,” he said.

But for corn, those buyers aren’t appearing.

Corn prices could fall to $3.45/bu. down the road and possibly lower with no good buyers in sight, Capinegro said.

“There’s chances we’re going right back down to $3.20, $3.10, those old lows.”

The dominant December corn contract declined by 19.75 cents during the week ended Wednesday to settle at $3.665/bu.

The corn market is so bearish that many traders normally would anticipate a bounce, but that doesn’t seem to be materializing, he said, especially as crop conditions improve.

“Everybody is now leaning toward one way, but you can’t fight Mother Nature.

“It’s depressing. It’s very depressing. There’s really nothing else to say about it.”

— Terry Fries writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow CNS Canada at @CNSCanada on Twitter.

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