CBOT weekly outlook: Corn, soy set for major move on acres

CNS Canada — Corn futures on the Chicago Board of Trade could be set for a major move depending on what the U.S. Department of Agriculture reveals in next week’s acreage estimates, according to an analyst.

“We’ll find out, did we really plant the 90 million (acres) or are we under?” said Scott Capinegro, president of Barrington Commodity Brokers in Barrington, Illinois. “Guys I’m talking to say they don’t see any preventive planting acres.”

USDA will release reports on both acreage and grain stocks on June 30 at 11 a.m. CT.

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Between now and then, he added, it is hard to see corn breaking out of its current range.

Favourable weather conditions have weighed down the market in recent days, sending it to its lowest point in four months. The front-month July contract dropped 8.25 cents per bushel during the week ended June 21 (all figures US$).

There are also ideas that the surging wheat market has lifted corn up to a higher level than where it actually should be, Capinegro said.

“It seems like the spread (between corn and wheat) moved from 60 cents last week to over a dollar this week.”

Crop development is behind last year’s pace and, while improving, still hasn’t hit an average yield of 170 bushels an acre, he added.

“However, if the weather stays good the next three to four weeks, it could be.”

When it comes to soybeans, investors are also fixated on the looming acreage report.

Many U.S. farmers switched out some corn acres to other crops because of soggy soil conditions.

Just how many acres went into soybeans is a topic up for debate. Some analysts have theorized four million acres of corn or more may have been switched into soybeans.

Those ideas, along with improving weather prospects in the U.S. Midwest, helped push soybeans lower over the week. The front-month July contract lost 13 cents.

The dominant July contract could fall below the $9 per bushel mark depending on what the report finds, Capinegro said.

However, he said, weather issues may loom just as large because soybeans are just six to seven inches tall right now and poised for rapid growth.

“If rains come around the first week of July I think we could go under nine,” he said. “Would I want to be a seller? No, not on this break.”

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

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