CNS Canada –– Soybean futures at the Chicago Board of Trade appear to be running out of room to the upside, and are now consolidating after posting sharp gains through March and April.
“A lot of positive news has now been discounted,” said Rich Feltes, vice-president of research at RJ O’Brien in Chicago, noting export demand has slowed down for both soybeans and corn following the recent rally.
“We’re into an erratic, consolidation trade until we get more into the growing season.”
Soybean planting is only just getting started in the U.S., but the corn crop was already roughly half-planted as of May 1, according to the weekly report from the U.S. Department of Agriculture. “The growing season is off to a better than average start,” said Feltes.
However, he didn’t think there was much room to the downside for either soybeans or corn, with commercial traders likely increasing their coverage on any breaks lower.
“End users have been living hand to mouth… and are now concerned over upside risk if there is any adversity over the summer,” said Feltes.
“The next trigger higher will be some sort of crop problem… Even in the good years, we’ll have some sort of problem.
“There are more ‘what ifs’ on the table right now than “we’re sures,'” said Feltes, adding that “the ‘what ifs’ always attract more risk premiums.”
Outside influences also have the potential to sway soybean and corn markets, he said, pointing to crude oil, foreign exchange rates and South American production issues as major factors market participants are watching.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.