MarketsFarm — With weather in the U.S. becoming more favourable for spring planting, combined with other factors, prices on the Chicago Board of Trade CBOT) are expected to push lower, according to Scott Capinegro of Barrington Commodity Brokers at Barrington, Ill.
“If you’re getting it planted and it rains, the stuff is off to a very good start,” he said, citing strong upticks in corn and soybean seeding.
The U.S. Department of Agriculture (USDA) reported corn planted hit 72 per cent complete as of Sunday, for a jump of 23 points on the week. Soybeans planted reached the halfway point, rising 20 points. However, spring wheat planted lagged behind, improving by only 10 points at 49 per cent complete.
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“It’s good for the market to break,” said Capinegro, noting the December corn contract was pulling back and testing the 50-day moving average of US$7 per bushel.
“When we go into the month of June and it does look warm and there are showers — it’s going to be pretty hard to get a rally going,” he added.
Apart from the pace of seeding in the U.S., Capinegro pointed also to ongoing matters surrounding the war in Ukraine. The United Nations has been pushing Russia to allow grain to be exported from Ukrainian ports it has either occupied or blockaded.
Several reports suggested that outcome was very unlikely, as Russia demanded all of the international sanctions placed against it be lifted. Nevertheless, the chatter was having a bearish effect, Capinegro said.
“That put the pressure on wheat, which is dragging down the beans and corn,” he said.
Adding to the situation was news of China negotiating a deal with Brazil to purchase corn, Capinegro said. With China unable to receive its corn purchases from Ukraine, it has turned to Brazil to fill the void.
Lastly, he noted the outside fund money that came into the markets in a very big way by acquiring near record longs — and the quick turns that can result.
“They’re not used to what can happen,” Capinegro quipped.
— Glen Hallick reports for MarketsFarm from Winnipeg.
