CNS Canada –– Soybean and corn futures at the Chicago Board of Trade moved higher during the week ended Wednesday, as both commodities saw a short-covering correction off of nearby lows.
However, large supplies and looming South American harvests remain bearish for the two crops, likely keeping the futures bouncing around in a sideways pattern for the time being.
“We’re probably still range-bound,” said Scott Capinegro of Barrington Commodity Brokers in Illinois, adding that “we’ve put in all the bear news that you can throw at a market.”
Attention will soon turn to U.S. spring weather, he said, with planting operations starting up in the southern states in about a month’s time.
Currently, there is no real weather premium in the futures, but any issues that develop could spark some fresh buying interest. “The market is starving for some other news,” he said.
Relatively low prices may not be encouraging acreage increases in the U.S., but Capinegro said planted area will likely be similar on the year as farmers will still need to plant something.
In addition, there were about three million acres of winter wheat that weren’t seeded in the fall, which will go into corn and soybeans.
As a result, he said yields, rather than planted area, will be where soybeans and corn will find support.
However, barring a weather rally, he said a test of downside support, of about US$3.50 for nearby corn and US$8.50 for soybeans, was possible.
From a chart standpoint, Capinegro was following one interesting pattern. In a U.S. presidential election year, going back to 1996, the corn market has consistently set lows in January, bounced and subsequently turned back down in February, but has never taken out the January lows. The market has then consistently turned higher in March, breaking above resistance.
Whether or not there was anything beyond coincidence at play, Capinegro said “it’s a beautiful trend.”
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.