CBOT soy seen weakening as soon as Brazil’s logistics improve

(Lisa Guenther photo)

CNS Canada — Chicago Board of Trade (CBOT) soybean futures moved higher during the week ended Wednesday, as continued good export demand for U.S. soybeans was bullish.

Brazil’s slower than normal harvest pace and its logistics problems related to a trucker strike both led to strong export demand for the U.S.

As soon as those issues clear up and Brazil and Argentina start exporting new-crop soybeans, CBOT futures will likely start to fall as the South American market will undercut the U.S., said Terry Reilly, senior commodity analyst with Futures International in Chicago.

“As soon as they start exporting beans, the U.S. program should significantly slow down for exports, and that’s when we see a general drawdown in prices,” he said.

“The nearby contract is projected to reach near-term contract lows just above $9.60 per bushel, and possibly trade down into the $9.30-$9.45 per bushel range (all figures US$).”

Further downward pressure could come into the U.S. soybean market if conditions for the upcoming U.S. crop look good heading into the planting season.

“If weather starts looking pretty good for new-crop plantings, we don’t see a reason for prices to sustain these levels of over $10 per bushel,” Reilly added.

CBOT corn futures moved the opposite way during the week, ending five to eight cents per bushel lower. Weakness in the CBOT wheat market spilled over to weigh on corn.

“The corn (market) has been riding the coattails of both wheat and soybeans over the past month,” Reilly noted. “I kind of view that market as in a tug-of-war over two-sided trade over the past month and a half.”

Because upcoming U.S. corn plantings are expected to be large, values are expected to come under pressure, but are likely to find chart support around the $3.50 per bushel level.

The U.S. Department of Agriculture predicted U.S. farmers will seed 89 million acres of corn this spring — down from 90.6 million last year, but still a very large area.

That figure could increase if soybean prices fall and corn values firm up before planting decisions are finalized, Reilly said.

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

 

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