CBOT soy, corn retreating with harvest pressure

CNS Canada — Soybean and corn futures at the Chicago Board of Trade moved lower during the week ended Wednesday, retreating from the nearby highs hit the previous week as increased farmer and speculative selling weighed on values.

Both soybeans and corn hit three-month highs last Wednesday (Nov. 12) before turning lower in subsequent days.

With the harvest of both commodities nearing completion across the U.S. Midwest, the strength earlier in the month was enough to encourage more farmer selling, said Joe Davis, vice-president of commodity sales with Futures International in Chicago.

With record-large U.S. production prospects for both crops, it was only a matter of time before the commercial pipeline started to fill up with farmer deliveries, said Davis.

Some technical support levels were hit on the way down, which encouraged additional chart-based selling, he said.

Soymeal had been a driver, pulling soybeans higher. “Some of the harvested beans are making their way into the pipeline, which is taking the pressure in the soymeal,” said Davis.

“We’ve seen the farmer use the last bit of strength (in the futures) to sell,” he added. While producers do have room to store much of their recently harvested crops, the approaching year-end is also encouraging producers to get something booked for cash flow.

Declines in soybeans, corn and wheat were all feeding on themselves, he said, with losses in wheat triggering a break in corn, which pulls on beans, and vice versa.

From a technical standpoint, the December corn contract finished the week right around its key 200-day moving average of US$3.625, said Davis. That was a key pivot point on the way up and could set the stage for a turn lower, now that prices are near that level again.

For soybeans, the situation is similar. Davis said there is psychological support at US$10 per bushel in the January contract, with the next major support at the 20- and 40-day moving averages of US$9.845 and $9.865 respectively.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.