CNS Canada — Soybean and corn futures at the Chicago Board of Trade moved higher during the week ended Wednesday, but have little fundamental reason to continue in that direction, according to an analyst.
Looking at corn, that market will be stuck in a sideways trading range for the foreseeable future, according to Preston Zacharias, of CHS Hedging’s Russell Consulting Group in Minneapolis.
Buyers were there at the $3.25 to $3.40 per bushel level for corn, he said, while expectations for a large carryout should keep resistance at about $3.60 to $3.70 (all figures US$).
“I don’t know how we shrink the pile unless there’s a South American weather problem; and right now that’s not on the table,” he said.
For soybeans, Zacharias linked the recent strength to spillover speculative buying interest tied to gains in the Asian vegetable oil markets.
A move by the U.S. Environmental Protection Agency expanding its mandated targets for biodiesel usage was also supportive.
However, at the same time, he said there was no real fundamental reason why soybeans should be trading above $10 per bushel.
“There’s an old saying, ‘You never trust a soybean market driven by the bean oil,'” said Zacharias, noting soymeal is under pressure.
He placed nearby soybean futures in a range of $9.25-$10.50 per bushel.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.