CBOT weekly outlook: Yield prospects key for soybeans, corn

CNS Canada — Corn and soybean futures at the Chicago Board of Trade recorded losses during the week ended Wednesday, as expectations of massive crops and high yields edge closer to becoming a reality.

“Since weather isn’t a major issue anymore, (traders) will be watching for potential record crop production sizes in the U.S.,” said Terry Reilly, senior commodity analyst with Futures International LLC.

“There should be some positioning by traders leading up to Aug. 12 and the (U.S. Department of Agriculture) supply and demand report, which will include the first survey for corn and soybeans for the season,” he said.

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Soybean futures for the September contract closed at $9.735 per bushel on the week ending Wednesday, just over a 26-cent drop from the previous week (all figures US$). Corn futures fell on the week also, dropping more than 10 cents, to $3.25 per bushel, for the September contract.

Corn is expected to continue trading sideways for the next few days, but could start moving slightly higher as crops start coming off, said Sean Lusk, director of the commercial hedging division of Walsh Trading in Chicago.

“We are starting to get some reports of possible issues as these guys walk their fields. They’re still looking at good crops, no matter what, but maybe the yields won’t be as good as some of the forecasts say right now,” he said. “If that news continues, I won’t even call it a rally but it could move a bit higher.”

A pickup in U.S. exports could also support prices, Reilly said. “Brazil is going to adjust their terms of GMO imports to maybe allow for U.S. imports… They had a shortfall in production this year.”

Soybeans could also see support from U.S. exports, he added. “Since there’s no weather premium built into the market it’s all about demand right now, and with the daily USDA sales to China and unknown destinations, traders are seeing support in the market.”

August is critical for soybean growth, causing prices to be temperamental with any bit of news, said Lusk.

“If we get any kind of weather scares, that will be enough to trade it one way for a day or so, but we’re getting good news from the field so fundamentally they still appear to be strong,” Lusk said. “Producers should look to take advantage of any rallies if they come in.”

— Erin DeBooy writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow her at @erindebooy on Twitter.

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