CBOT weekly outlook: Corn, soy run into strengthening U.S. currency

CNS Canada — The growing currency crisis in Turkey is starting to impact other economies throughout the world, and by extension commodities such as soybeans and corn.

As the Turkish lira drops in value, many investors have begun to put their money into the U.S. currency. It’s a common move when markets are troubled as the greenback is generally regarded as the world’s reserve currency. The Russian ruble, Indian rupee and South African rand have all weakened in recent days.

The U.S. dollar is currently on an upward trend, but while that may be good news for importers it isn’t helping everyone.

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“Traders realize the U.S. dollar may start to hinder U.S. agriculture products,” said Terry Reilly, senior analyst with Futures International LLC in Chicago.

Soybeans are currently locked in a choppy $8.35-$9 per bushel range, he said (all figures US$).

Corn futures are showing some technical strength, as the 50-day moving average traded lower than the 20-day moving average this week.

“Now that those averages crossed themselves yesterday it could signal bullish momentum on the technicals,” explained Reilly.

The support comes at a welcome time as a bearish U.S. Department of Agriculture report on Friday, and spillover weakness from wheat continue to pressure the corn market.

“So basically a tug of war between wheat and bean prices could lead to a sideways trading range for corn,” he said.

One thing that could boost corn prices is if USDA were to lower its yield numbers in its next report.

“In addition, the short (corn) crop in Brazil which was caused due to late season drought,” he said. “This could spur U.S. exports.”

— Dave Sims writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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