CBOT weekly outlook: Corn, soy brace for ‘volatile’ report

(Lisa Guenther photo)

CNS Canada — As traders count down the hours to the U.S. Department of Agriculture’s prospective plantings report on Friday, a small camp is closely watching a weather situation in the U.S. South.

Showers and thunderstorms have moved across much of the U.S. southern Plains and are expected to move into the U.S. Midwest soon.

According to Brian Rydlund, a market analyst for CHS Hedging in St. Paul, Minn., that has sparked ideas that conditions could get too wet for some crops.

“If there’s going to be a complaint it’s that we’re too wet, as opposed to too dry,” he said. “It might be a just small backburner item now but this wet is worth watching.”

Both corn and soybeans lost ground during the week ended Wednesday the depth of the losses was much larger for soybeans. The May corn contract lost just a quarter of a cent while the soybeans contract fell 30 cents (all figures US$).

Most of the trade’s attention is now focused on the release of the USDA report at 11 a.m. CT Friday.

This report, which includes information on both stocks and acreage, tends to move the market, Rydlund said.

“It’s a volatile report; we tend to get big price swings once the data gets spewed forth,” he explained. “I don’t imagine this will be different.”

In general, analysts expect soybean acres to increase from the 83.4 million recorded last year.

“More bean acres were predicted because of the economics of it. I think the running guess is about 88 to 88 and a half million acres,” said Rydlund.

The expected increase in U.S. acreage, massive South American soybean crop and mild weather have created bearish headwinds that will be tough to counter, he added.

“Beans still look heavy and I think $10 per bushel is a real good resistance right now on the upside, barring some kind of weather scare.”

For corn, Rydlund said the trade seems to think acres will fall to 91 million compared to 94 million last year.

“When corn is nearing $3.50 per bushel at this time of year, that’s probably considered pretty cheap,” he said.

Some analysts suspect corn acreage may not fall as low as 91 million but Rydlund said that sentiment is already baked into the equation.

A rally by corn and wheat could also pull up the other end of the market, he added.

“If I’m a speculator I don’t think I will short them (corn) with the growing season in front of us, and if we do rally, they may pull the beans by their bootstraps along with them,” he said.

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

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