MarketsFarm – Shifting South American weather forecasts will likely keep the soybean and corn markets at the Chicago Board of Trade on edge over the next few months, as crops in Brazil and Argentina develop.
“There is a fair amount of hot and dry weather in South America right now,” said Tom Lilja, of Progressive Ag in Fargo, North Dakota, noting that private forecasters were cutting their production estimates in both Brazil and Argentina.
“It’s all about South American weather… there’s a lot of worry about the weather,” said Lilja, adding that the latest forecast models were not in agreement which was adding to the uncertainty in the futures markets.
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Soybeans have been trending higher over the past few weeks, while corn touched two-year lows. Soybean stocks in the United States are on the tighter side, so South American production will be especially important for that market with prices likely having more room to the upside.
From a technical standpoint, Lilja said January soybeans were running into psychological resistance at US$14.00 per bushel, with the next upside target at the summer high around US$14.20 and then again at US$14.50.
For corn, the carryout projections are much more comfortable and “unless they really burn up down there (in South America,” Lilja expected the corn market to hold rangebound through the winter. He placed nearby support in December corn at US$4.68, with resistance at US$5.00 per bushel.
— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg.
