CBOT corn, soybeans see bearish weather and yield estimates

CNS Canada — Corn contracts on the Chicago Board of Trade closed mixed on the week ending Wednesday, with only September contracts closing higher. December contracts for corn closed at US$10.38 per bushel, down from $10.4675 the previous week.

Traders are focusing on yield estimates from ongoing crop tours in the U.S., according to industry participants.

“That, along with a crop conditions report that came out Monday afternoon at 3 p.m., show that corn and (soy)beans are in good to excellent condition, well above the five and ten year averages,” said Sean Lusk, the director of commercial hedging at Walsh Trading in Chicago.

“Couple that with the weather that we’re getting. We’re getting enough consistent rain and enough sunshine (and) going forward for the next six-day forecast and into next week, we’re getting warmer temperatures and we’re getting wetter and the yields look to be coming in better.”

Private forecasts from both the ProFarmer and Informa crop tours indicate a high level of moisture in the soil, which is increasing yield potential as harvest approaches.

The ProFarmer crop tour scouts forecast higher corn yields in Indiana, South Dakota and Ohio than what the U.S. Department of Agriculture had reported (USDA).

“And in the near term (the) weather outlook out of the Labour Day weekend is optimal, it can’t be any more optimal,” said Lusk. “They’re getting rain in most of the Grain Belt; they’re getting good amounts, it’s half an inch higher, and they’re getting warmer temperatures.”

Soybean futures in Chicago were also mixed on the week that ended Wednesday, with only gains in the September contract. December soybeans closed at US$3.675, down from $3.6975 the previous week.

Crop tours are showing reports of good-sized soybean pods, Lusk said, which can most likely be attributed to the warmer temperatures. Approximately 71 per cent of the U.S. soybean crop is rated as being in good or excellent condition.

“The USDA was conservative on their estimate, they’ll probably adjust it to other numbers, and traders are starting to look at that,” he added. “The only thing bullish right now in the market is that they’re running up old-crop beans — September contracts versus the November versus the January — and eyeing that spread because they’re looking at an old ending stocks numbers.”

Overall, Lusk said, soybean and corn contracts are being pushed lower by optimal weather conditions and private forecasts from crop tours and says these levels should remain steady, unless an extreme bullish weather event occurs prior to harvest.

— Marney Blunt writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

 

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