CNS Canada — Soybean and corn futures posted solid gains over the past week, and may have more room to the upside as the U.S. Midwest enters the heat of summer.
“It’s still early July, and we have the bulk of the important growing weather ahead of us,” said Rich Feltes, of RJ O’Brien in Chicago, adding there is low confidence in the current forecasts.
“That lack of confidence breeds uncertainty, and the uncertainty adds a risk premium,” he said on the strength in soybeans and corn.
Weekly crop ratings will be a major driver over the next few weeks, he said, as updates from the U.S. Department of Agriculture will give an indication of the yield potential.
From a chart standpoint, both corn and soybeans are sitting well above their major long-term moving averages, which could be seen as downside targets if the markets see a correction.
For corn, the 200-day moving average for the September contract comes in at around $3.78 per bushel, which would be well below Wednesday’s close of $3.92 per bushel (all figures US$).
The 200-day moving average for November soybeans, $9.82 per bushel, is about 12 cents below Wednesday’s close.
Large South American supplies are also overhanging the U.S. futures, especially for corn, which could make it “tough to get something going,” according to Feltes.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.