CNS Canada –– Chicago Board of Trade corn and soybean futures moved sharply lower during the week ended Wednesday, and could see more downside going forward.
“As long as crude oil keeps on grinding lower, the U.S. dollar remains fairly strong, I think that prices have an opportunity to continue to grind lower as long as there’s no weather premium built in the market,” said Terry Reilly, senior analyst with Futures International in Chicago.
Much of the recent declines are linked to large global supplies for corn and soybeans, as well as signs of slowing export demand for both commodities.
“There’s uncertainty about whether or not corn exports will now reach (U.S. Department of Agriculture) projections, based on a good start to the second corn crop in Brazil, which could lead to a very large crop that could come on line around mid-June for export,” he added.
For old-crop values, traders are expected to continue focusing on large South American crop prospects and ample global supplies.
The May corn contract broke through key support levels during the week, and could be headed to contract lows just below $3.40 per bushel, Reilly said (all figures US$).
“I think short-term support would be around $3.60/bu. If we break through that, then we’re trading down to $3.40 or $3.45/bu. in my opinion,” he added.
For soybeans, the May contract will likely find pretty good support around $9.35/bu., and after that at its contract low of US$9.2875.
If the May future falls below its contract low, that could carve a path for prices to move below US$9/bu.
“But the problem with that is it may not get there by the time we roll around to the first notice day,” Reilly said.
For new-crop values, the spotlight will be on the upcoming 2015-16 corn and soybean futures. Soybean acres are expected to jump to record large levels, while corn area should decline.
There could be some short-covering rallies seen for old- and new-crop corn and soybean contracts going forward, but they will also be seen as good selling opportunities, Reilly added.
— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.