The advancing soybean and corn harvest in the United States weighed on the Chicago futures in mid-October, but seasonal selling pressure should be subsiding soon, with more attention in the grain and oilseed markets shifting to South America.
The U.S. soybean harvest was already two-thirds complete as of Oct. 13, running well ahead of the 51 per cent average for the second week of October, according to U.S. Department of Agriculture data.
Meanwhile, the corn harvest was eight points ahead of average at 47 per cent done. Relatively warm and dry conditions aided the harvest but may lead to reduced bushel weights and yields.
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The November soybean contract touched a session low of US$9.6825 per bushel on Oct. 17. The break below US$10 per bushel in the front month was a bearish influence from a chart standpoint. December corn briefly traded below its own psychological support around US$4 per bushel, but quickly recovered to hold above that point.
Speculative fund traders were busy covering short positions in both commodities over the past few months and were close to shifting to a net long before the latest turn lower. A large fund position can easily sway a market, and some analysts think the speculators may go back to bearish bets now that they’ve booked profits and the fundamentals are showing little need to take prices higher.
Managed money fund traders were still heavily short on the Canadian canola futures as of Oct. 8, but the net short position of about 88,000 contracts still represents the smallest level since the futures were at their highs of the year back in July.
Looking at the long-range charts, soybeans and corn remain relatively bearish while the canola market appears more stable. Left to its own devices, canola futures could trade in a sideways range between $600 to $650 per tonne over the next few months. However, with the U.S. harvest wrapping up, some price direction could come from South America.
Hot and dry weather has slowed soybean seeding in Brazil, according to reports. However, forecasts are starting to improve and early expectations are still for record-large production.
