MarketsFarm — Good U.S. Midwestern weather should keep the bias to the downside in corn and soybean contracts at the Chicago Board of Trade over the next few weeks, according to an analyst.
Corn hit fresh contract lows on Tuesday before showing some recovery Wednesday, but “it’s not looking like it’s hit a bottom just yet,” said Preston Zacharias of CHS Hedging in Minnesota.
He placed psychological support in the December corn contract at $3 per bushel, with the next downside target at the 2009 lows near $2.90 per bushel (all figures US$).
“We’re looking at pretty good weather… and the crop is certainly not getting any smaller or suffering any ill effects,” Zacharias said, adding that “the bears get pretty emboldened by conditions like that.”
The situation was similar in soybeans, he said, with favourable weather weighing on prices. The nearby and deferred soybean contracts had also recently traded at an inverse, but have since moved to a carry situation.
“That’s one of the fundamental triggers that says ‘We have enough beans out here and don’t need to encourage any selling.'”
Soybeans are still well off their contract low of $8.30 per bushel in the November contract, and Zacharias placed support in the contract at $8.50 per bushel.
“If you go 10 cents lower than here ($8.7875 on Wednesday) we’ll be challenging those numbers, because it will look like we have a midterm top in here,” said Zacharias.
However, he added, soybeans were benefiting from better export demand than corn, and could find support from Chinese business if more materializes.
— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.