MarketsFarm — A bullish market and sharp increases in commodities at the Chicago Board of Trade (CBOT), turned downward Wednesday in what Sean Lusk of Walsh Commercial Hedging Services called a “much needed correction.”
Prices pulled back that day by varying degrees for soybean, corn and wheat futures, coinciding with declines in other commodity futures and the global oil market.
“You’re not going to go up every day,” Lusk said. “This is just a healthy correction in my view. Whether it turns over or not, I don’t think we’ll get a deeper correction or a reversal until after the July 4 weekend.”
The CBOT, he added, will continue to lack an accurate view until the U.S. Department of Agriculture releases its next grain stocks report at the end of June.
There were some fears of “ultra-low stocks for soybeans,” he said, when USDA released its May supply and demand estimates, which should have been shrugged off.
“You have a whole planting and growing season, and harvest to go,” Lusk said, noting USDA will very likely make adjustments to its forthcoming grain stocks and supply/demand reports.
As for large sales of new-crop corn to China, he cautioned these might only be old-crop sales being cancelled. Also, he said, growing conditions for U.S. wheat have not been as bad as initially believed.
Forecasters will have a much better idea of yields for U.S. corn and soybeans in July and August respectively, Lusk said.
“Until they get an idea what the balance sheet is, you’re going to see these wild gyrations in the market,” he said, noting prices are higher than what they were four to five years ago.
— Glen Hallick reports for MarketsFarm from Winnipeg.