CBOT weekly outlook: Large U.S. soy, corn crops hit resistance

CNS Canada — Soybean and corn futures at the Chicago Board of Trade have moved up over the week ended Wednesday, but remain stuck in sideways trading ranges overall as large crops find themselves countered by equally large demand.

“It’s a tug-of-war between the biggest supply ever, versus some of the strongest demand we’ve ever seen for this time of year,” said Sean Lusk, director of commercial hedging with Walsh Trading in Chicago.

While harvest results continue to beat the already record-large expectations, any dips in soybean prices have been short-lived as China comes forward to buy, said Lusk.

Traders covering short positions before options expire on Friday (Oct. 21) contributed to the recent strength in soybeans, he added, but after that attention they will return to the phenomenal yields.

The U.S. Department of Agriculture releases its next supply/demand estimates on Nov. 9, and industry participants are generally anticipating upward revisions to both the soybean and corn yield estimates. The question now is just how bearish USDA will be, added Lusk.

Depending on how large USDA’s yields adjustments are, Lusk said the corn carryout forecast could conceivably top 2.5 billion bushels and soybeans 500 million bushels. Both numbers would be bearish.

There are also question marks surrounding South America. In addition to the production prospects and potential weather issues, Lusk said Brazil may also need to import corn from the U.S. this year, due to problems with its second crop.

From a chart perspective, November soybeans find themselves between about $9.40 and $10 per bushel, with the range for December corn seen anywhere from $3.20 to $4 (all figures US$).

Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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