CBOT weekly outlook: Corn, soy trade watching South America

CNS Canada –– Seasonal holiday trade could lead to some choppiness in the Chicago Board of Trade soybean and corn markets over the next week, although the general bias will likely remain pointed lower in the New Year, barring a weather scare out of South America.

“There’s a reluctance to take on new positions ahead of the holidays,” said Rich Feltes of RJ O’Brien in Chicago.

“Holiday markets are by definition treacherous, because there are fewer players engaged and we’re in a no-man’s-land between the end of the crop reports in the U.S. and the beginning of the most important South American growing season.”

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Managed funds are still holding sizeable long positions in soymeal, which Feltes saw as a possible bearish influence on soybeans if those positions are liquidated.

Also, he noted, the Brazilian soybean crop was improving every day, while U.S. soybean plantings will likely be up in 2018.

“Even though the global demand for beans is admittedly very brisk, South America is capturing the majority of that growth, not the U.S. — our exports are down,” said Feltes.

As a result, he expected South American weather conditions and shifting production estimates out of the region would dictate the movement in soybeans when activity picks back up in 2018.

For corn, attention will be on the U.S. Department of Agriculture’s January crop report. “Big crops typically get bigger,” said Feltes, noting that expected U.S. corn yields keep rising and could do so again in the next report.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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