CBOT weekly outlook: Markets stabilize following USDA reports

CNS Canada — Corn and soybean contracts on the Chicago Board of Trade (CBOT) are catching up following the release of U.S. Department of Agriculture (USDA) reports last Friday.

Corn “went down on Friday in response to the report. We couldn’t file through it all yesterday. So we actually ended up finding some short-covering and I think the markets are just kind of sold out right now,” said Jack Scoville, a senior market analyst at Price Futures Group in Chicago.

USDA’s production report raised the 2017-18 U.S. corn harvest, surprising traders who had expected it to drop. Corn stocks were raised as well.

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Scoville feels the market is done its downward trend and is ready to stabilize, adding we could even see a rally of 10 cents to get back to the $3.60-$3.70 per bushel range (all figures US$).

With the USDA reports out, attention has now turned to South America where there is potential for a large corn crop.

“We still have plenty of corn down here. But on the other hand, the market hasn’t been able to do anything with the downside given some rather big supplies and a big carryout projection for next year. So it acts like it’s going down,” Scoville said.

Soybeans, on the other hand, traded higher following Friday’s releases. USDA lowered its 2017-18 production forecast which was the opposite of what analysts had thought would happen. The March contract settled Wednesday at $9.69 per bushel, up 19 cents since the report was released.

“It seems to be at a place where people have been willing to sell the market… it hasn’t really been able to run higher but it’s also kind of in a range,” Scoville said.

As with the corn markets, interest has now shifted to South America, where the harvest is fast approaching with crops currently in the flowering and pod filling stages.

“Given that the weather is less than perfect, I think there’s a note of caution here. So I expect the market to be kind of choppy and sideways over there,” Scoville said.

The big surprise from Friday’s releases was in winter wheat acres, which were larger than expected. The news sent the Chicago March contract down more than 10 cents to close Friday at $4.21 per bushel.

However, Scoville said, the market has seen some support this week with Egyptians buying wheat. It closed Friday at $4.22 per bushel.

U.S. wheat, he said, is “relatively cheap right now. So I think the fact that the Egyptians are paying a little bit more money is kind of bullish for us.”

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

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Ashley Robinson - MarketsFarm

Ashley Robinson writes for MarketsFarm specializing in grain and commodity market reporting.

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