Further selling expected in CBOT corn, soybeans

(Lisa Guenther photo)

CNS Canada — Corn and soybean futures on the Chicago Board of Trade (CBOT) moved lower during the week ended Wednesday — and the two markets are expected to remain under pressure until at least mid- to late September.

“I think we’re just going to see this gradual selling over the next month, month and a half, given that we have expectations for the crop sizes to get larger for both beans and corn in the next USDA report,” said Terry Reilly, senior commodity analyst with Futures International in Chicago.

The U.S. Department of Agriculture on Tuesday released its first surveyed production estimates for 2014-15 U.S. corn and soybeans, pegging both crops at record-large levels. [Related story]

The U.S. soybean crop was expected to produce 3.82 billion bushels, while corn was pegged at 14.03 billion. The next USDA report, which as Reilly said is expected to show even larger production numbers, is expected out on Sept. 11.

For soybeans, ending stocks should also remain fairly high for 2014-15, as USDA didn’t make any changes to its demand component in Tuesday’s report, Reilly said.

One factor that may come in and support the bean market is some light bull spreading, as both U.S. soybean and soymeal are still experiencing strong demand for old crop, he added.

But once harvest starts in the U.S., prices will likely come under pressure as they normally do, assuming weather shapes up for early plantings in South America.

Reilly noted it’s a bit too early to tell how plantings will go in Brazil and Argentina, but development of an El Nino could be beneficial as it would provide more moisture.

Taking harvest pressure and expectations of record large 2014-15 crops into consideration, Reilly said November beans could move down to as low as US$9 a bushel, while December corn has a downside target of US$3.25 a bushel.

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

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