CBOT weekly outlook: More losses likely as U.S. harvest pressure mounts

(Lisa Guenther photo)

CNS Canada — Soybean and corn futures at the Chicago Board of Trade are both trending lower and should continue to do so, as seasonal harvest pressure and large production estimates will limit the upside potential over the next few weeks.

“To some extent, the large crops are dialed in to our prices,” said Rich Feltes, of RJ O’Brien in Chicago.

While the U.S. soybean harvest is only about 10 per cent complete, he said there are still questions over the size of the U.S. soybean crop, with yields consistently coming in above official estimates.

“That is certainly suggestive of lower lows for beans,” said Feltes.

For corn, yield reports are more variable. Feltes said the consensus was starting to lean toward ideas that corn yields were not as large as the record levels reported by the U.S. Department of Agriculture earlier in September.

However, he added, condition ratings remain very good for this time of year, which he saw as a sign that any downgrades in yields may be minimal.

USDA on Friday will release a grain stocks report, which will offer some further direction for corn as it will provide a picture of feed usage over the past quarter. There was a very wide range of estimates for corn, Feltes said, leading to some uncertainty in the futures.

Questions over Chinese demand and South American production are also still up in the air. Some traders are of the opinion that China will be buying fewer soybeans this year, while other industry sources suggest otherwise.

For corn, Argentina is generally expected to be growing more of the crop this year, which should weigh in the background.

From a chart perspective, Feltes said soybeans likely had at least 50 cents more room to the downside, which would take the November contract to the $9 per bushel mark (all figures US$). If soybeans were to fall, he expected corn would be dragged lower as well.

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

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