Winnipeg – Soybean and corn futures at the Chicago Board of Trade may be finding some short-term support from harvest delays across the Midwest, but expectations for large crops overall should limit the upside for prices going forward, according to an analyst.
“The highs could be in right now,” said Rich Feltes, of R.J. O’Brien in Chicago.
He noted that while any issues with the harvest should be supportive, “weather delays are usually more quantity than quality related.”
Yields are generally beating expectations for both soybeans and corn, and updated production estimates from the United States Department of Agriculture due out on Oct. 11 will have more credibility than normal due to the fact that the harvest was running ahead of normal up until now.
“After the crop report, we’ll be transitioning into watching demand,” said Feltes. He said both soybeans and wheat were looking poor on the demand front, but corn business was running ahead of the year ago level.
However, the ongoing trade battle with China that’s cutting into soybean movement may also have a longer-term bearish influence on corn. If China “can prove to the world that they can get through the winter without U.S. soybeans, we’ll see a sizeable increase in U.S. corn acres next year,” said Feltes.
As a result, he didn’t expect to see much upside in corn, even if the demand is there, “because we could be buried in corn next year.”
For wheat, while U.S. exports continue to face stiff competition, the recent price trends are look more constructive.
“Wheat will be sought after on breaks,” said Feltes pointing to drought issues in Australia, Russia’s smaller crop and harvest delays in Canada as providing support.