MarketsFarm — Soybean and corn futures at the Chicago Board of Trade may be hard pressed to move much higher in the short-term, as advancing harvest operations across the U.S. leave the market flush with supplies.
However, solid underlying demand should remain supportive on the other side, according to an analyst.
“Seasonal harvest pressure is capping gains in (soy)beans and weighing on corn,” said Terry Reilly, senior agricultural strategist at Marex in Chicago, adding that he expected prices for both commodities could trend lower in the short term.
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In addition to the U.S. harvest pressure, improving moisture conditions in Argentina — where farmers are planting their next soybean and corn crops — were also being watched by market participants. Reilly said recent rains could see some farmers switch some acres out of corn and into soybeans instead. That would be supportive for corn prices, while weighing on soybeans.
The soyoil/meal spread was another feature to watch. While the balance between the two products has seen meal strengthen over the past month and oil move lower, “maybe some traders will be rethinking their long meal short oil spread,” according to Reilly.
Additional crushing capacity coming online by the end of November should result in increased meal supplies, he noted, and demand for soyoil from the renewable fuel sector “is not going away.”
From a technical standpoint, January soybeans could test the $13.35-$13.40 area if there is more export business, but seasonal harvest pressure could take values back down to the nearby low of $12.70, according to Reilly (all figures US$).
For corn, “I wouldn’t discount lower prices given the heavy U.S. balance sheet and slow export commitment pace,” Reilly said, placing nearby support around $4.55-$4.60. “But if we get some demand here in the market, there’s the possibility we could go back up and retest the $5 level.”
For wheat, Reilly expected the Chicago December contract could get back above the $6 per bushel level that it briefly tested on Friday, but added that such a move would likely bring in more farmer selling with a downside target around $5.50 per bushel.
— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg.
