MarketsFarm — Solid export demand, a short squeeze by fund traders and production uncertainty in South America have all propped up Chicago soybean futures over the past week, with more gains possible ahead of the year-end before correcting lower, according to an analyst.
With the South American harvest still some time away, “you might have one or two run-ups in December in the soy complex… before the inevitable pullback when Brazil hits harvest time,” said Sean Lusk of Walsh Trading in Chicago. Drought conditions hurting the crop prospects in Argentina should also be supportive.
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From a technical standpoint, he said, nearby soybean futures were looking at an upside target around US$15.36-$15.40 per bushel, which would be halfway between the spring highs and the July low.
However, weakness in crude oil and soyoil may limit the upside potential for soybeans. An upcoming supply/demand report from the U.S. Department of Agriculture could also provide nearby direction, although Lusk said the December report was typically not much of a market mover, with only modest adjustments to the balance sheets expected.
For corn, recent price activity was somewhat bearish from a chart standpoint, with losses in wheat also weighing on prices. Lusk expected the market to chop around within its range over the next few weeks, with year-end positioning a feature.
USDA’s report should also be a non-event for corn, although Lusk said corn could find some support if USDA keeps its ending stocks estimate unchanged, rather than raising it as most participants expect.
— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.
