CNS Canada –– The Chicago Board of Trade soybean market is increasingly being weighed down as rain-stricken farmers switch out acres intended for corn into oilseeds.
The July contract plunged 32.25 cents per bushel during the week ended Wednesday (all figures US$).
“You can see the corn has already gained on beans a dime this week,” said Scott Capinegro, president of Barrington Commodity Brokers in Barrington, Ill. “People understand you still got time to plant beans.”
For over two years some analysts have said beans were poised to fall to the $8.85 or even $8.35 mark.
The time may be ripe for that to happen, Capinegro said. “It almost feels like it’s time with this carryout we have that we get down there.”
However, he said, it will still take a while before soybeans drop below the $9 per bushel mark.
He thinks a rally could also happen, depending on the weather.
When it comes to corn, Capinegro said he was surprised to see the ratings in the U.S. Department of Agriculture’s first crop conditions report of 2017.
“The category that hit me right away was that fair to poor category reading of 35 per cent; that’s one third of the corn crop, not a real good start,” he said.
Indiana and Illinois are facing some of the worst crop conditions in over 10 years, he added, and many farmers are trying to decide whether or not to finish planting.
The July corn contract gained less than a cent during the week as it continued to chop around between its recently established range of $3.68-$3.75 a bushel.
Around 14 million acres of corn still need to be planted or replanted, with a crop insurance deadline coming Thursday.
Some analysts have predicted corn area could drop by four million acres.
However, he feels some farmers will go ahead and plant anyway, regardless of the deadline.
“A farmer isn’t in the business to collect insurance checks,” he said, pegging acreage losses in corn at just two million.
The July contract has room to move higher but is facing two resistance levels, according to Capingego. The first is at $3.815; the second is at $3.85.
The December corn contract could jump as high as $3.99 or $4.02 given the right set of conditions.
“I think that’s where we could be headed right now but time will tell; no one controls the weather,” he said.
— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.