CBOT weekly outlook: Markets move ahead of USDA report

MarketsFarm — Chicago Board of Trade (CBOT) market participants are awaiting next week’s prospective plantings report from the U.S. Department of Agriculture (USDA), due out March 31.

Ahead of the report, average trade estimates predict 93 million acres of corn, 90 million acres of soybeans and 46 million acres of wheat will be planted in the U.S. this year. In 2020, about 92 million acres of corn, 83.8 million acres of soybeans and 44.3 million acres of wheat were grown.

Scott Capinegro of Barrington Commodities at Barrington, Ill. said the upcoming report has already had an effect.

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“Corn and soybean (spreads) have widened back out where they should probably be from the lows of a week-and-a-half ago,” he said. “I think they are anticipating a bullish report. We know the acreage is going to be there for corn and beans.”

Recent wet weather across parts of the U.S. has taken weather premiums out of new-crop corn and soybeans and has lowered wheat prices, Capinegro added. The strengthening U.S. dollar has also created a negative effect on crop prices, while soybeans have received support due to Chinese demand.

Soybeans “still have some support even though China hasn’t been back in the market, but (it) also hasn’t cancelled as many (purchases) as you would think at this time frame,” he said. “That’s because Brazil is still running behind… I guess (China) is sitting on their hands and make sure (it) gets the beans from Brazil first before switching from old crop to new crop.”

Capinegro is also watching the May soybean price, saying it will be “constructive” if it closes above $14.55 per bushel and could lead to $15.50 (all figures US$). However, Capinegro is wary of a sharp decline to $13.75.

As for corn, he expects a 20-cent decline in the December contract if wet weather continues and next week’s acreage numbers are promising.

Nevertheless, while corn and soybean prices remain at their highest levels since 2017 and wheat is experiencing choppy trading, two major factors will affect prices in the coming weeks.

“It will still come down to what our acreage and what our spring weather are going to look like. Our two trouble spots right now are in the Dakotas. They’re probably the driest out of all the states,” Capinegro said.

“If we start planting, get some rains, I see pressures on the markets. But then comes the first week of June and the rule of thumb is if you’re short, maybe it’s time to cover because we’re going to be going into our summer weather. We know we can’t afford another bad year of yields here.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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