MarketsFarm — Hot and dry weather conditions cutting into crop ratings for soybeans and corn in the U.S. could see prices for both crops rise above nearby chart resistance levels, although the looming harvest may temper the upside potential.
Both soybeans and corn were rated 53 per cent good-to-excellent in the latest weekly crop report from the U.S. Department of Agriculture, marking a five-point drop for beans and three points for corn from the previous week.
“We still have some weather concerns of possible heat that could have a negative effect on beans,” said John Weyer, director of commercial hedging with Walsh Trading in Chicago, adding that corn was being dragged along with soybeans.
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From a chart standpoint, he said the lows could be in for corn for the time being, unless there was a marked improvement in the U.S. crop.
“There is enough concern about lower yields out there to keep (corn prices) up,” said Weyer. He said the December corn contract was looking at $5 as an upside target (all figures US$).
For soybeans, the November contract is less than 20 cents away from $14 per bushel, and Weyer expected it would retest that level if condition ratings continued to deteriorate.
The heat is coming at a time that is especially hard for soybean crops to handle, but the extent of the yield losses for both soybeans and corn won’t be fully known until the harvest “making it a bit of a guessing game right now,” according to Weyer.
USDA’s monthly supply/demand estimates (WASDE) will be released Sept. 12, with any surprises in the data likely to cause swings in the futures — although Weyer noted market participants were not expecting any major changes in the September report.
— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg.
