CNS Canada — Soybean and corn futures at the Chicago Board of Trade may be finding some short-term support from harvest delays across the U.S. Midwest, but expectations for large crops overall should limit the upside for prices going forward, according to an analyst.
“The highs could be in right now,” said Rich Feltes of R.J. O’Brien in Chicago.
While any issues with the harvest should be supportive, he noted, “weather delays are usually more quantity- than quality-related.”
Yields are generally beating expectations for both soybeans and corn, and updated production estimates from the U.S. Department of Agriculture due out Tuesday (Oct. 11) will have more credibility than normal, due to the fact that harvest was running ahead of normal up until now.
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There were good gains for the Chicago soy complex during the week ended Feb. 4, due to positive news that Wednesday.
“After the crop report, we’ll be transitioning into watching demand,” said Feltes. Both soybeans and wheat were looking poor on the demand front, he added, but corn business was running ahead of the year-ago level.
However, the U.S. government’s ongoing trade battle with China, which has been cutting into soybean movement, may also have a longer-term bearish influence on corn.
If China “can prove to the world that they can get through the winter without U.S. soybeans, we’ll see a sizeable increase in U.S. corn acres next year,” said Feltes.
As a result, he didn’t expect to see much upside in corn, even if the demand is there, “because we could be buried in corn next year.”
For wheat, while U.S. exports continue to face stiff competition, the recent price trends look more constructive.
“Wheat will be sought after on breaks,” said Feltes, pointing to drought issues in Australia, Russia’s smaller crop and harvest delays in Canada as supportive.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.
