CBOT weekly outlook: U.S. weather supports corn, weighs on soy

CNS Canada –– Soybean and corn futures at the Chicago Board of Trade came under pressure over the past week, but are expected to see divergent moves in the near future as poor planting weather in the U.S. Midwest may see acreage shift out of corn and into soybeans.

News that U.S. President Donald Trump is set to sign an executive order triggering the process to back out of the North American Free Trade Agreement (NAFTA) was bearish for both corn and beans on Wednesday, amid concerns over declining sales to Mexico.

However, once the latest geopolitical issue settles down, attention will be back on U.S. planting weather, said Preston Zacharias of CHS Hedging’s Russel Consulting Group.

While it is still early in the planting season, it is looking like farmers may run into difficulties getting the corn seeded in a timely fashion, he said.

“If that happens, it leans towards more bean acres,” he said, adding that “it makes more sense for beans to be down than corn.”

Zacharias noted U.S. farmers are facing a May 15 deadline to get corn in the ground, with yield prospects dropping after that point. As a result, even if both corn and soybean prices keep moving lower, “beans will just go down faster.”

If the poor weather persists, farmers will lock up their bins, which will provide support and limit the downside in the futures.

“The risk and path of least resistance is still higher for corn,” said Zacharias, placing resistance in the new-crop months at the previous high of $3.9575 per bushel (all figures US$).

“Any poke above $3.76 (Dec corn) has some excitement in it.”

On the other side, he saw support at $3.75 per bushel.

Soybeans have a much more bearish balance sheet, according to Zacharias. He placed support in the November contract at $9.41 per bushel, with resistance not seen until $9.80 per bushel.

“We’re hanging around much closer to the lows than we are the highs on beans,” said Zacharias.

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

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