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CBOT weekly outlook: Soy faces bullish charts, bearish fundamentals

CNS Canada — Soybean futures at the Chicago Board of Trade posted solid gains over the past month on the back of weather concerns in Argentina.

While there’s more room to the upside from a technical standpoint, the fundamentals are starting to become old news.

“I think the Argentine story is a little bit exaggerated, and I’m not sure if (soybeans) have much more legs,” said Preston Zacharias of CHS Hedging’s Russel Consulting Group.

However, “from a technical point of view, they have nothing but blue sky above them,” he added.

On a continuous chart, he said, nearby soybeans were looking at US$10.80 per bushel as the next resistance. Beyond that, Zacharias placed the next target at US$12 per bushel.

While the charts look bullish, “the fundamentals don’t point to that at all,” said Zacharias. While crop estimates out of Argentina continue to be revised lower, due to hot and dry weather, the Brazilian crop is getting bigger.

Overall, he estimated, export competition out of South America would be down by about eight million tonnes on the year.

With spring planting soon approaching, the seasonal fight for acres between corn and soybeans will soon start to be felt in the futures.

Realistically, Zacharias estimated rotational issues only left about 10 million swing acres, with only about two million of that likely to actually shift from early projections.

Area planted to both crops is likely to be large, while old-crop carryout supplies are also burdensome. As a result, Zacharias warned, a repeat of last year’s spring selloff was a possibility to be aware of.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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