Chicago corn to test US$3 mark by mid-month, analyst says

(Lisa Guenther photo)

CNS Canada — Corn futures on the Chicago Board of Trade were lower during the week ended Wednesday, as funds continued to try and take advantage of new lows on the market.

“People in the market come in and try to cherry-pick the bottom,” said Sean Lusk, director of commercial hedging at Walsh Trading in Chicago.

“You’ll see rallies continuing to be sold because there’s no frost concerns, harvest is underway or getting underway, and the weather looks to be optimal,” said Lusk.

Harvest progress in the western Corn Belt, especially Illinois and Indiana, will be watched carefully to see if yield quality continues to come in at the same “phenomenal” level as earlier in the harvest, he said.

“If that’s a precursor to the rest of the crop up north, there will be bumper crop everywhere,” he said, noting cooler temperatures would likely lower that quality a bit in the weeks to come.

“We’ll be looking for that harvest low around the middle of the month; we’ll see if there’s enough push here to take out corn at three bucks,” said Lusk.

Soybean futures on the Chicago Board of Trade were lower during the week ended Wednesday, as this year’s large harvest kept the path of least resistance pointed to the downside.

“We’re technically bearish on the charts, every time a low happens you get short covering,” said Lusk.

According to Lusk, global supplies are ample right now and there was an especially high number of beans on the market last week.

Farmers, too, have been hanging onto beans and using them to short the market. He expects a new low to be established by the middle of this month.

“The rule of thumb is once the crop is 35 to 40 per cent harvested, you kind of have your low, we’re not there at all,” said Lusk.

Beans could go as low as $8.80 for the November contract, he said.

The strength of the U.S. dollar is bearish and there is also nothing on the outside influencing the market right now. As a result, he said, traders are paying less attention to the weekly U.S. Department of Agriculture crop progress reports than before.

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

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