CNS Canada — Unexpected demand for corn and soybeans is supporting markets in Chicago, according to one U.S. trader, a trend he expects to continue.
Soybeans — “It’s just not over yet,” said Sean Lusk, director of commercial hedging with Walsh Trading in Chicago.
Chicago Board of Trade (CBOT) soybeans rallied in late April after a U.S. Department of Agriculture (USDA) report showed lower ending stocks.
After seeing some profit-taking pressure, the market is set to gain again.
Increased demand from Argentina for soybeans and soymeal is expected to drive the market higher, Lusk said.
Flooding in the country has caused harvest to run behind its normal pace, and likely reduce bean quality.
“They are now coming to the U.S. and other ports across the world to fill their needs,” he said. “Until this story plays itself out, we’re going to continue to rally.”
While Lusk said he expects soybeans to continue gaining into next week, that doesn’t mean higher prices will stay long-term.
“You have a classic ‘buy the rumour, sell the fact’ here,” he said.
Traders are looking to weekly export numbers and an upcoming world agricultural supply and demand (WASDE) report — due out June 10 — from USDA for further direction.
Since last week, soybean prices have gained US10.25 cents per bushel in the July contract.
Corn — Like soybeans, the corn market has seen unanticipated demand, as Brazil’s crop has been hurt by drought.
“Down in South America the weather has turned real hot and dry. In Brazil their secondary corn crop got caught short,” Lusk said.
He said he expects global demand to increase going forward.
“Once you get these profit-taking dips, as we’ve seen this week and last week, we’re not going to sit around here for long.”
Rain in the U.S. is hampering domestic seeding, which is also providing support to the market.
Eastern corn areas such as Indiana and Ohio are lagging in planting progress, Lusk said.
“Until that situation plays itself out, better planting progress going forward here, the market is going to stay big.”
Since last week, corn prices have gained US5.25 cents per bushel in the July contract.
— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.