U.S. weather to determine price direction for CBOT beans, corn

(Lisa Guenther photo)

CNS Canada — Soybean futures on the Chicago Board of Trade were higher during the week ended Wednesday, with new-crop gains outpacing old-crop as traders worked to correct the spread between the two, participants said.

Old-crop values found some support from continued worries about tight U.S. supplies, with all contracts lifted by signs of persistent strong demand from China.

The unwinding of long corn, short soybean spreads also helped to lift new-crop prices during the week, said Scott Capinegro of Barrington Commodities in Barrington, Illinois.

But expectations that the 2014-15 US soybean crop will be very large will be bearish for prices going forward.

“We’re going to get more bean acreage here, there’s no question about it with the northern tier (of the U.S.) having some problems planting corn,” he said.

Favourable planting conditions, paired with good soil moisture and beneficial rainfall once the crop has been put in the ground, also make it look like the 2014-15 US soybean crop will be very large this year.

If weather conditions remain favourable, prices for new-crop soybeans will likely start to break as the tight supply situation in the U.S. will move to a large supply situation, analysts said.

CBOT corn futures were weaker during the week, despite some concerns about acreage losses in the northern-tier states in the U.S. due to the late spring. The majority of U.S. corn-growing regions were seeing beneficial planting weather, helping farmers to get a lot of the crop in the ground.

The market was moving toward key support levels, with a 20-week cycle low expected to be hit at the end of May, or first week of June, Capinegro said.

After that, the market is expected to remain choppy as traders continue to watch weather in the corn-growing regions of the U.S.

Conditions for planting and development this spring are better than they were a year ago, Capinegro said, which should continue to put downward pressure on the market.

So far, it looks as though the 2014-15 crop will see good production because of good soil moisture conditions and timely rains this spring, according to Capinegro.

But prices could see a rally if there is a weather problem later on in the growing season.

Farmers will mainly be watching weather going forward for both corn and soybean markets, though the Ukraine situation could also come along and move prices if anything changes, Capinegro said.

“Nobody can predict what can happen there (in Ukraine),” he said. “But, so far it hasn’t disturbed the markets.”

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

 

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