CBOT weekly outlook: Traders flee stocks for commodities

CNS Canada — Traders shifted attention to Chicago Board of Trade (CBOT) corn and soybean markets in the wake of a drop in Wall Street stocks, causing a commodities rally Wednesday.

Wall Street was dragged down Tuesday by U.S. bond yields, which hit the three per cent mark for the first time in four years. Traders abandoned stocks and moved their attention to the commodity market.

“Guys are taking money out of stocks and looking for a new place to go; where is that? That is into commodities, which is giving a boost to our grain markets today,” said Steve Georgy, president of Allendale Inc.

CBOT July corn on Wednesday closed 5.75 cents higher at $3.975 per bushel (all figures US$). July soybeans rose 5.25 cents to $10.3925 per bushel.

“It’s a day-by-day thing. So if we’re looking at it on a full week we’ve got a mixed emotion. Because if we get in the fields and we get planted right now the American farmer will just keep on planting, and so we will see more acres, which is bearish, not bullish,” Georgy said.

Earlier in the week, traders were paying attention to the weather, which brought corn and soybean contracts down.

The U.S. Midwest had “warmer temperatures; there’s no snow in the forecast so that’s good,” Georgy said. “But the biggest thing is that the warmup is going to get farmers back in the fields and we were going to see some planting progress taking place this week.”

Heading into next month, he said, traders will start to look toward the U.S. Department of Agriculture (USDA) crop production report due out May 10.

“It’s a new month, will we see new money? But really, it’s going to be supply-and-demand because in May it is going to be the first time that we get a look at new-crop carryout numbers for corn and beans.”

The new USDA numbers will be compared with the acreage predictions released in March, when USDA predicted plantings of 88 million acres of corn and 89 million of soybeans.

According to Georgy, traders are looking for there to be a carryout stock of 1.8 billion bushels for new-crop corn and 450 million for soybeans.

“So those numbers are more likely to become friendly or have the market react bullish once they come out, because it will be lower than where we’re currently at right now.”

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

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