MarketsFarm — Soybean and corn futures at the Chicago Board of Trade have seen some wide price moves over the first trading week of July, as a surprisingly bullish acreage report at the end of June was quickly superseded by the weather.
“Right now it’s weather; the weather has trumped the bullishness of the June 30 report,” said analyst Rich Feltes of RJ O’Brien in Chicago.
Both soybeans and corn climbed sharply higher in reaction to the acreage estimates from the U.S. Department of Agriculture, with the area planted to both crops coming in below expectations. However, values have fallen back to roughly the areas they were in before the report.
Feltes said the perception that U.S. Midwest weather has improved, with forecasts calling for a wetter period into the middle of July, was enough to weigh on prices.
However, that perception is still not reality and whether that moisture materializes will be critical for the markets over the next few weeks, he said.
The demand side of the equation could also put some pressure on values, if prices become too expensive and lead to demand rationing or substitutions.
“We’re getting to the point where it’s not only weather,” Feltes said, noting market participants will be watching for reports of slowing Chinese demand or adjustments in livestock rations away from corn.
The large managed-fund net-long positions in soybeans and corn could also come to play in the futures.
— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.