CNS Canada –– Chicago Board of Trade corn and soybean futures moved sharply lower during the week ended Wednesday, and are expected to trend sideways to weaker for the rest of the month.
Traders are going to focus on spring weather and seeding conditions until more acreage and yield estimates for the 2015-16 crops are released by the U.S. Department of Agriculture in June, said Scott Capinegro, president of Barrington Commodities in Illinois.
So far, there doesn’t seem to be any real widespread threatening weather, which could be bearish for prices and cause problems for farmers who still have a large amount of unpriced old-crop corn and soybeans.
“If they’re holding (old-crop) now they’re only hoping for some kind of a weather problem to get a little spurt of a rally,” Capinegro said. “And if we don’t have any weather problems, they’ve got a long summer coming at them.”
Whether there’s a weather-related rally in either market or not, the long-term outlook shows more downside risk for soybeans than corn.
“The corn market will have some support in it just because the (2015-16 U.S.) carryout of 1.75 million bushels is a little lower than expected,” he said. “And if we don’t reach the USDA’s yield estimate (166.8 bushels an acre), it is coming down even further.”
USDA also pegged the 2015-16 U.S. soybean carryout at a larger than expected 500 million bushels in its monthly supply and demand report on Tuesday.
The government agency estimated an average soybean yield of 46 bushels an acre for the 2015 U.S. crop, which could be bearish for the soybean market if it’s realized.
“We’ve got a long growing season, but if it comes true, the beans are going to be really the ones that cave in,” Capinegro added.
In the shorter term, any rallies will be seen as good selling opportunities, he said.
The US$3.85-$3.90 per bushel level is a sell target in December corn, he added, while November soybeans will struggle to move above the US$9.40-$9.49 per bushel range.
— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.