CNS Canada — Soybean and corn futures at the Chicago Board of Trade will soon face seasonal harvest pressure, but good demand may limit the downside this year.
Slight upward revisions to the U.S. Department of Agriculture’s yield estimates in the latest supply/demand report weighed on soybeans and corn on Tuesday, but the soybean losses were completely erased by Wednesday’s close, while corn also showed signs of stabilizing.
Preston Zacharias of CHS Hedging’s Russell Consulting Group in Minnesota said the half-a-bushel per acre increases in corn and soybean yields were “ultimately not big adjustments,” especially as some weather models were already leaning toward better yields, despite the pre-report analyst consensus.
The U.S. corn harvest will pick up over the next few weeks, which should put a bearish slant on the market, according to Zacharias. However, he expected there wasn’t much more room to the downside, with December corn likely holding above US$3.30 per bushel.
Corn exports might be underestimated in the official data, he added. “There is room for improvement on the export number, which would tighten things up again.”
For soybeans, the slight upward revision in average yields was “within the margin of error” and didn’t necessitate such a large move in the futures, according to Zacharias.
“Every year we grow a bunch of beans and we find a home for those beans.”
There is a lot of pent-up demand for soybeans, he added, with large commitments already on the books for September.
“We need to pull a lot of bushels out of the farmers’ hands to get to the export commitments we think we’ll have by the end of December, which could put a logistical squeeze on the market.”
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.