MarketsFarm — Soybean and corn futures at the Chicago Board of Trade fell off nearby highs over the past week, with shifting weather forecasts directing the flow of money in the markets.
“Ninety per cent of our price influence in a supply-side driven market during the growing season will be weather,” said analyst Sean Lusk of Walsh Trading in Chicago, adding “we’re reacting off of every forecast.”
He noted forecasts for hot and dry weather across the U.S. Midwest, which had boosted prices in early July, now call instead for more rain, taking some weather premiums out of the market.
“Overall, we’re watching the weather and how the market responds to the weather,” said Rich Feltes of R.J. O’Brien in Chicago.
If the rains in the latest forecasts fail to materialize, Lusk said a retest of the nearby highs hit earlier in July was possible in both soybeans and corn, with November beans seeing resistance at $9.08 per bushel and December corn at around $3.41-$3.52 (all figures US$).
Beyond the weather, ideas that Brazil may be oversold on soybeans could provide some support for the Chicago futures, with 60 per cent of the country’s crop already spoken for. There are also reports that Brazil is importing Paraguayan beans to meet domestic consumption needs, said Lusk.
Ongoing sabre-rattling between the U.S. and China is also still a factor, although Lusk noted China is still buying for the time being.
— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.