CBOT weekly outlook: Soybeans to break below US$9 before summer half over

CNS Canada –– The Chicago Board of Trade (CBOT) soybean market showed some short-covering-related firmness during the week ended Wednesday, but the bias is still pointed lower for the oilseed.

“We could actually see the beans trade down to the low $9, then to an $8 handle. Maybe $8.90 would be my initial target for the July beans if we see a significant sell-off in the market,” said Terry Reilly, senior analyst with Futures International in Chicago (all figures US$).

Generally favourable weather conditions for U.S. soybean crops and the large global oilseed supply situation are expected to weigh on new-crop values in the longer term.

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There is some upside potential for old-crop prices in the shorter term, as demand for U.S. soybeans is strong while Argentine workers are on strike.

“I think there’s still the possibility we’re going to get some additional soybean meal exported out of the U.S., which might be supportive for the July spreads for both beans and meal,” Reilly added.

“But, as soon as Argentina gets on line four to six weeks from now, after ending their crusher strike, old-crop prices should trend lower.”

CBOT corn futures are also likely to trend lower in the longer term, despite seeing a short-covering bounce during the week ended Wednesday.

Corn’s downside is more limited than in the oilseed markets, due to good demand for the commodity.

“Industrial demand is fairly strong. In addition, we’re seeing a little pickup in export demand. Major importers are turning back to the U.S. to pick up large cargoes of corn, as prices have come down enough in the U.S. to become attractive for Southeast Asian buyers,” Reilly said.

Good weather conditions and large supplies will still keep prices under pressure, meaning the July contract could fall to the $3.25-$3.30 per bushel level before the end of June, he noted.

Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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