CNS Canada –– Chicago Board of Trade soybeans are expected to face volatility in the week ahead, but also have upside potential, while corn should extend its rally, one U.S. analyst says.
Soybeans have the opportunity to trade above $11 per bushel in the July contract, depending on the movement of soymeal, said Terry Reilly, senior agriculture futures analyst at Futures International (all figures US$).
If July soymeal trades up to $380-$385 per short tonne — gaining momentum with export demand — then soybeans could follow higher.
“But we’re a little bit suspect of these high prices,” Reilly said.
The cash basis for meal is starting to ease, which could cause downside for the commodity.
“We expect a little more volatility to enter the soybean market,” Reilly said.
He pegged soybeans’ upside at $11.05 in the July contract, and $10.50 on the downside.
Over the course of the week, soybean prices have lost three cents per bushel in the July contract.
Reilly said he expects corn prices to continue gaining over the course of the week, adding that the market could break above $4-$4.05 per bushel.
“A lot of that is fundamentally behind the U.S. losing some corn acres in the eastern Corn Belt,” Reilly said.
Excessive rain in the region has pushed the planting season back, and prompted some producers to switch acres to soybeans.
While corn has appreciated on the week, he added, some traders are taking advantage of low prices relative to soybeans.
Reilly put corn’s upside at $4.05 and the downside at $3.90.
Since last week, corn prices have gained 22 cents per bushel in the July contract.
Traders are closely watching outside economic markets, which are moving both commodities.
“Crude oil, particularly, will have a heavy influence on our markets,” said Reilly.
Money inflow from fund managers, which had propped up the markets in previous sessions will also be closely watched over the course of the week.
“Export demand will also be very important to monitor over the next few weeks,” Reilly added.
— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.