CNS Canada — Soybean and corn futures at the Chicago Board of Trade have short-term downside potential, one U.S. analyst says, as traders watch exports, weather and fund positioning.
Since last week, soybeans have lost close to 25 cents per bushel in the May contract, closing at $9.4425, while corn advanced 6.25 cents per bushel, closing at $3.6775 on Wednesday (all figures US$).
Though there was divergence between the markets on the week, both have the potential to decline in coming sessions, and are being swayed by similar factors.
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As the harvest in southern Alberta presses on, a broker said that is one of the factors pulling feed prices lower in the region. Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, added that lower cattle numbers in feedlots, plentiful amounts of grass for cattle to graze and a lacklustre export market also weighed on feed prices.
Traders will be using weekly export sales reported by the U.S. Department of Agriculture (USDA) as one source of direction in coming weeks, said Terry Reilly, senior agriculture futures analyst with Futures International in Chicago.
They’ll be looking to see “how many U.S. beans make their way to China, because any uptick in demand will probably soften the losses in the bean market,” Reilly said.
For corn, investors will look to the weekly reports to see how much export market share the grain is getting. Argentina’s supplies could add some competition moving forward.
As planting in the U.S. nears, traders are heavily watching weather patterns to see if there will be any delays in the upcoming crop, Reilly said.
Massive moves in fund positioning will also be closely watched by investors, he added.
“We have room for additional fund selling in these markets.”
— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.
