CNS Canada — Soybean and corn futures both suffered losses over the past week as improving weather patterns in South America have pushed the commodities below their recent support levels.
CBOT March corn dipped below the psychologically-important $3.50 a bushel level on Tuesday (all figures US$). The market was pressured by the U.S. Department of Agriculture’s monthly supply and demand report which came out in the morning. It said the world corn carryout would rise to 204.1 million tonnes, which was slightly higher than the previous estimate.
However, rains have improved soil conditions in parched regions of Argentina, and more precipitation is expected to fall.
“If that’s the case it looks like we’re going to make more corn and that’s not good for price. I’m expecting us to go sideways or lower,” said Brian Rydlund, market analyst at CHS Hedging in the greater Minneapolis-St. Paul area.
Corn futures tried to stage a rally soon after the report came out and futures dipped, but ultimately it fizzled out, he said.
“I wouldn’t be surprised to see that continue to happen unless something spurs us on.”
Rydlund pegs resistance for the March corn contract at $3.65 a bushel and floor support at $3.35.
Soybeans have also been under pressure, with the $10 a bushel level a distant memory.
The USDA report weighed down soybean contracts after it raised U.S. ending stocks by 20 million bushels over its previous estimate.
Dry conditions in Argentina have prompted some to lower production estimates for the country, Rydlund said, but added that might not matter.
“Conab thinks the Brazilian crop is bigger than what the USDA was thinking,” he said. “So whatever we thought we might be losing in Argentina it looks like Brazil will make up for.”
He put support in the January contract at the $9.70 level and resistance at $10.
Just days ago Rylund said the soybean market was developing a nice trend line but that has disappeared.
“We’re not having any trouble growing stuff and that’s the bottom line.”
— Dave Sims writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.