CBOT weekly outlook: Rangebound corn, soy watch South America, exports

CNS Canada — Weak exports and improving growing conditions in South America are casting a bearish tint over near-future prospects for corn and soybeans.

One market analyst in Illinois noted the corn market was also extremely oversold.

“A good technical close for December corn this week would be over $3.36” a bushel, said Scott Capinegro, a broker at Barrington Commodities (all figures US$).

While that price may seem good from the outset, he points out it is still just three cents off the contract low.

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The market seems to be setting itself up for a dead-cat bounce sometime next month, Capinegro said.

“I don’t think it will take us very far though, because we’re so oversold with record shorts in corn.”

Down the road Capinegro sees some light coming with looming demand. “China is going to need more corn for their ethanol program,” he said.

As for soybeans, he said, the market seems locked in a trading range of $9.75-$10.05 a bushel.

“That’s maybe the range we’ll have for the next four weeks,” he said.

Soil moisture conditions in Argentina are drawing a lot of focus these days, as recent rains have helped improve growing conditions. However, many areas could still use more precipitation, which is drawing a lot of interest from market-watchers.

“For January beans, $10.04 (per bushel) is unchanged for the year so that’s the swing number,” he said, noting the market momentarily hit $10.01 earlier this week.

He expects farmers will soon stop making sales unless they need money to pay off bills. This could tighten up the basis in the U.S., but Capinegro said exports are still behind last year and ending stocks will be considerable.

“So one of the other problems is ‘Why would you want a big rally in corn and soybeans when it would push us out of that export window even more?'”

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

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