MarketsFarm — Corn and soybean futures at the Chicago Board of Trade, now trading at their highest levels in years, could come under some pressure over the next month, although the longer-range outlook remains strong, according to a broker.
Crop insurance levels in the U.S. are based in part off of new-crop futures prices during the month of February. As a result, seasonal trends often lead to softer prices during the month, according to Scott Capinegro of Barrington Commodity Brokers at Barrington, Ill.
China should also be moving to the sidelines during its Lunar New Year celebrations, which will take some of that demand out of the market, he added. Brazil’s harvest is also getting underway, putting additional pressure on grain markets.
While the nearby trend may be steady to lower, “when I look at corn, I still think some new highs are possible… if China steps in and buys some more,” Capinegro said.
“If you have the patience and you’re a bull, buy the dips and it seems to be working in the grains.”
From a chart perspective, Capinegro said front-month corn still had an upside target of $5.75 per bushel (all figures US$). “Whether that will be the March contract or the May is hard to say… but any breaks around $5.15-$5.25 will be a good value to re-own.”
For soybeans, “we could push into the $15 (per bushel) range, and maybe as high as $15.50, but we have to get through the February seasonals,” according to Capinegro.
Dry weather at planting time could provide the eventual incentive for a move higher, he added.
“I’m still bullish for 2021, but you have to pick your spots.”
— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.