CBOT weekly outlook: Corn, soy to fall on weather, post-report

(Lisa Guenther photo)

CNS Canada — Corn and soybean futures at the Chicago Board of Trade are moving into position ahead of two key reports, but following that data, the market will shift back into weather trading, one U.S. analyst says.

Corn — Corn futures moved lower on the week ended Wednesday, as traders exited long positions with favourable weather, ahead of U.S. Department of Agriculture (USDA) acreage and grain stocks reports, due out Thursday.

The market is likely to continue to notch lower into next week, as favourable crop conditions add pressure.

“The last couple weeks we’ve seen better weather come in for corn,” said Sean Lusk of Chicago-based Walsh Trading.

Ample carryout and lower-than-expected demand from South America could add to corn’s declines in coming sessions, Lusk said.

Since last week, corn lost 20.5 cents per bushel in the September contract (all figures US$).

“They’re reducing heading into quarterly stocks, so it’s not surprising we sold off,” Lusk said.

Traders expect the report to show a cut in area from the 93.6 million acres USDA projected in its March prospective plantings report.

If seeded area comes in lower, the market will see some short-lived support.

“After that we’re going to be back to the weather, no matter what they say,” Lusk said.

Soybeans — Traders are holding long positions, despite a number of bearish factors, as strong demand underpins the soybean market.

“Weather is flip-flopping on a weekly basis, but as long as China keeps buying we’ll stay big,” Lusk said.

Since last week, soybean prices have gained 3.25 cents per bushel in the August contract, though more deferred contracts moved lower.

Traders expect Thursday’s report to show a rise in acres from the 82.2 million acres projected in the March prospective plantings report, which will temporarily strain the market.

“But nobody wants to short the bean market here,” Lusk said. “After the report they’ll say ‘What report?'”

Crop conditions are also favourable, which could pressure the market near the end of July, Lusk said.

“We’d be ripe for a major, major selloff.”

While Lusk expected soybeans to extend gains into next week, by the end of July traders will have a hard time justifying positions — then he expects declines to kick in.

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

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