CBOT weekly outlook: Corn, soy down with optimal weather

(Lisa Guenther photo)

CNS Canada — Favourable weather is good news for producers, but bad news for prices, as Chicago Board of Trade corn and soybean futures edge lower with a relative lack of concerns.

Corn — Corn futures have been grinding lower over the course of the week as South American harvest is expected to start soon, and demand remains tepid, said Sean Lusk, co-director of Walsh Trading’s commercial hedging services division.

“You can’t find any bullish news,” Lusk said.

Weather premiums have disappeared in the corn market and South America’s harvest will add to already high on-farm stockpiles, he added. “And demand is just not meeting it.”

Since last week, corn futures have lost seven cents per bushel in the May contract, and six cents per bushel in the July contract (all figures US$).

Looking forward to next month, corn should see a boost in prices from investor short-covering, Lusk said.

“I think in the back of trader’s minds you’ve got big reports coming as we enter into March,” he said.

Traders will be watching world agricultural supply and demand estimates, production, and export data released by the U.S. Department of Agriculture (USDA).

An upcoming U.S. Federal Reserve meeting March 15-16 will have an effect on the greenback, which in turn will influence CBOT commodity prices.

“But near-term it’s purely technical trade,” he said. “And it’s been a struggle here to move anywhere.”

Soybeans — Prices have been under pressure as new-crop soybeans from South America are expected to hit the market within a few weeks.

South America’s harvest is advancing, and weather has been favourable, which weighed on soybean prices, a trend which will likely continue over the course of the week.

Since last week soybeans have lost 13 cents per bushel in the May contract and 11 cents per bushel in the July contract.

Soybean prices could move as far as $8.54 in the May contract, Lusk said.

A strong U.S. dollar and reports of good yields in South America are expected to keep the heat on prices short-term.

Soybeans closed at $8.7225 in the May contract on Wednesday.

Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.


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