WINNIPEG, Dec. 13 (CNS) – Soybean and corn futures both suffered losses over the past week as improving weather patterns in South America have pushed the commodities below their recent support levels.
March corn dipped below the psychologically-important US$3.50 a bushel level on Tuesday, Dec. 12. The market was pressured by the USDA’s monthly supply and demand report that came out in the morning. It said the world corn carryout would rise to 204.1 million tonnes, which was slightly higher than the previous estimate.
However, rain has improved soil conditions in parched regions of Argentina, and more precipitation is expected to fall.
“If that’s the case it looks like we’re going to make more corn and that’s not good for price. I’m expecting us to go sideways or lower,” said Brian Rydlund market analyst at CHS Hedging in the greater Minneapolis-St. Paul area.
The report’s numbers on U.S. corn supply and demand were slightly bullish, as the forecast for corn processed into ethanol increased.
Corn futures tried to stage a rally soon after the report came out, but ultimately it fizzled out.
“I wouldn’t be surprised to see that continue to happen unless something spurs us on,” he said.
Rydlund pegs resistance for the March corn contract at US$3.65 a bushel and floor support at $3.35.
Soybeans have also been under pressure with the $10 a bushel level a distant memory.
The USDA report weighed down soybean contract after it raised U.S. ending stocks by 20 million bushels over its previous estimate, due to weaker than expected American soy exports.
Rydlund says dry conditions in Argentina have prompted some to lower production estimates for that country. But he ays that might not matter.
“Conab thinks the Brazilian crop is bigger than what the USDA was thinking,” he said. “So whatever we thought we might be losing in Argentina it looks like Brazil will make up for.”
He puts support in the January contract at the US$9.70 level and resistance at US$10.
Just days ago, Rylund said, the soybean market was developing a nice upward trend line but that has disappeared.
“We’re not having any trouble growing stuff and that’s the bottom line.”