CBOT weekly outlook: Weather wreaks havoc on crops

MarketsFarm — Unusual weather, both in North and South America, has significantly affected commodities this week at the Chicago Board of Trade, according to a broker.

A brutal cold snap, extending from northern Canada to the U.S.-Mexico border, has slowed down soybean crushing, halted production at ethanol refineries and raised energy prices in the U.S., according to Chicago-based Futures International grain analyst Terry Reilly.

“Some of these ethanol companies have actually sold some of their natural gas back to the grid. We’re seeing a little bit of hiccup in demand in the U.S.,” he said, adding that the effects of winterkill on wheat won’t be known for another two weeks.

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“Now that the coldest temperatures are now behind us, I think we’re seeing a little bit of risk-off in the wheat market, which is dragging corn down.”

Reilly expects March soybean contracts to stay within the $13.50-$14 per bushel range, with corn remaining between $5.35 and $5.65/bu. (all figures US$). March Chicago soft wheat contracts will trade between $6.25 and $6.70, he added.

Dry weather in Argentina and intense rains in parts of Brazil could have major effects on corn and soybean harvests in those respective countries and analysts are keeping a close eye on both nations. Reilly said the state of the U.S. dollar will also be closely watched.

“(They) will indicate how much exportable supplies (Argentina and Brazil) have over the next 12 months,” he said.

The U.S. Department of Agriculture is holding its annual outlook conference this week, providing the agency’s preliminary estimates on planting intentions for 2021.

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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