CBOT weekly outlook: Weather seen steering soybeans

CNS Canada — CBOT soybean futures posted solid gains over the past week, coming to a five-and-a-half month high on Tuesday.

Weather guided the soybean trade, rather than the U.S. Department of Agriculture’s acreage and stocks reports.

John Weyer, co-director of the commercial hedge division at Walsh Trading, said soybeans came in near or above consensus.

The report put planted soybean acres at 85.139 million, which compares with the average industry estimate of 85.171 million acres. U.S. farmers planted 83.701 soybean acres in 2014.

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U.S. grain stocks for soybeans were at 625 million bushels, according to the USDA report, compared with an average industry estimate of 670 million bushels.

The report was neutral to bearish based on numbers, Weyer said, but the trade is taking it higher in the bullish run.

“We’re near a record here. Our feeling is that the trade is disregarding that and relying more on the recent weather that we’ve had here — particularly heavy rains, flooding,” he said.

As long as the U.S. stays wet, prices will continue to jump higher, he said, and he had initially put an upside target at $10.20 (all figures US$).

“When you’re in weather trade, you sort of have to respect that it might go right through those levels,” he said — and it did go through those levels. November soybean futures on Tuesday hit a high of $10.38.

Less corn area

USDA’s report showed a drop in corn acreage, which should have a bullish effect on prices in weeks to come.

The USDA report put planted corn acres at 88.897 million, compared to the industry average of 89.292 million. Last year farmers planted 90.597 million acres.

U.S. grain stocks for corn were at 4.47 billion bushels, according to the USDA report, compared to an industry average estimate of 4.555 billion bushels.

“We’re hearing a little bit of concern for the corn — what kind of yield they’re getting — because the stuff that’s emerging is emerging into flooded fields,” Weyer said.

December corn futures hit a high of $4.3225 on Tuesday, and Weyer said prices have the potential to move further as traders keep weather concerns at the forefront.

“If weather keeps up and we’re hearing more stories of crop condition — anything negative — there is going to be a three to four per cent move.”

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

 

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