MarketsFarm — Soybean and corn futures at the Chicago Board of Trade were boosted by last Thursday’s bullish supply/demand estimates from the U.S. Department of Agriculture, but attention has since shifted back to South American growing conditions.
“The primary thing right now is South American weather,” said market analyst Tom Lilja of Progressive Ag at Fargo, N.D. Nearby forecasts call for heat and dryness in Argentina, which is supportive for prices, while conditions in Brazil have been more favourable through the growing season.
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“Argentina does continue to be the biggest concern amongst the trade,” Lilja said, noting production estimates out of the country continue to be revised lower.
From a technical standpoint, “the soybean market has developed into a decent looking uptrend,” he said. Meanwhile, he added corn futures were trying to establish an uptrend, but the March contract would need to see a sustained move above US$6.95 per bushel in order enter an uptrend of its own.
Lilja expected such a break higher could be a challenge, given poor export demand U.S. corn has experienced lately.
Uncertainty over Chinese buying interest going forward is overhanging both soybeans and corn. “Somedays they’re saying China will open up, and two days later there’s another COVID outbreak… but if China does open up, that would be a very supportive factor in the market,” Lilja said.
Ongoing conflict in Ukraine is also leading to day-to-day volatility, especially in wheat, with that market still very sensitive to news out of the region.
“Australia had a good wheat crop, which will keep a lid on things,” Lilja said, adding that rising production estimates out of Russia were also weighing on prices, although talk that the country may introduce export quotas could be supportive.
Movement in crude oil will also be a factor providing direction for the grains and oilseeds, with Lilja of the opinion that oil prices have likely bottomed for the time being.
— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.
