Winnipeg, Sept. 4 – Chicago Board of Trade corn futures fell to fresh contract lows during the week ended Sept. 4, but could be running out of room to the downside amid concerns over the lateness of this year’s United States crop.
The weather is benign and the government is telling us there’s really no problem with the crop,” said analyst Preston Zacharias of CHS Hedging’s Russell Consulting Group in Minneapolis accounting for the softness in the futures.
December corn settled at US$3.5850 per bushel on Sept. 4. While some analysts still see US$3.30 as a possible target, Zacharias expected the low in the December 2018 corn contract of US$3.48 would likely provide support.
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“We have less stocks going in and a smaller crop, so I don’t think we need to be lower than that,” said Zacharias.
“There’s a lot of this crop that has a long, long way to go,” said Zacharias. He noted that much of the corn crop was planted late this year, with fields north of the I80 interstate highway “at a big risk of not making it to maturity.”
The U.S. Department of Agriculture releases updated supply/demand estimates on Sept. 12, but Zacharias didn’t expect to see any significant adjustments to the yield estimates until October or November.
“We’re probably two months away from getting news that will shake this bearish attitude away,” said Zacharias.
For soybeans, large old crop carryout is looming over the market, but delayed crop development should also provide underlying support.
With an estimated 60 million acres of the U.S. soybean crop seeded after June 1, “you won’t get any 80 bushel yields out of that stuff,” said Zacharias adding “I think our bean yield will be significantly lower than what we’re being told at the moment.”
From a chart standpoint, the November soybean contract settled at US8.7550 per bushel on Sept. 4. That marked the first time the contract settled above its 21-day moving average since mid-July on Sept. 4 which was mildly bullish, according to Zacharias. “It’s a significant barrier that it has been respecting on the way down.”
