CBOT weekly outlook: Markets await USDA reports

CNS Canada — Updated production, stocks and acreage numbers due out from the U.S. Department of Agriculture on Friday should provide some nearby direction for U.S. grain and oilseed markets.

“I can’t really get too bullish on the bean market with the large USDA estimates hanging over our heads,” said Terry Reilly of Futures International in Chicago.

In addition to expectations for an upward revision to the 2017 U.S. soybean crop, he said South American production estimates will also be followed closely.

The market was anticipating a bearish production estimate out of Brazil, but that could be countered by a more supportive production number out of Argentina, Reilly said.

However, he added, rains in the nearby forecast for Argentina should alleviate some stress there.

Barring a bullish surprise from USDA, Reilly expected the March soybean contract would test the US$9.45 per bushel level.

Meanwhile, “corn and wheat are near contract lows, and it will take a really bearish USDA report to pull those contracts lower,” said Reilly.

He added that “every time (corn) dips a bit lower there’s a pickup in U.S. export interest.”

For wheat, expectations that USDA will confirm a decline in winter wheat acres this year should be supportive, with weather problems in Australia also adding to ideas that wheat could trend higher in the short term, according to Reilly.

However, if the decline in U.S. winter wheat acres on the year isn’t as large as expected, Reilly said it could weigh on Chicago and Kansas City winter wheat contracts.

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