Views on commodities and energy
Barring any big market surprise in the next two weeks, prices should keep within recent ranges until USDA releases its first U.S. planting numbers for corn and soy based on a farmer-survey, traders said. Everyone is expecting a big hike in U.S. corn acres given the projected demand for corn.
Private analyst planting estimates are expected to start surfacing next week. National Oilseed Processors Industry Association will issue its February crush figures.
This week, Friday’s monthly USDA report failed to stir any excitement as U.S. stock estimates were unchanged, just as traders expected.
It seems like traders are turning their attention to spreads — old-crop/new-crop corn, corn/soybeans as the price relationships are adjusting. Also, Friday’s trade data from the Commodity Futures Trading Commission showed that managed funds heavily cut their long positions in corn, wheat, soybeans, soyoil and soymeal in the week ended March 6. That could give some support to prices Sunday night and early Monday.
There’s every reason to expect more volatility this week.
Traders anticipate an upward correction after the sell-off. Technicals seem to be the driving force for day-to-day action but long-term fundamentals are supportive. USDA’s preliminary supply-and-demand stocks estimates for the upcoming year issued on Friday reinforced that sentiment.
Fundamentally, soybean yield reports out of South America are confirming a big harvest. Traders are also watching export demand, waiting to see if this week’s slide stimulated fresh business. Commercial grain firms definitely took advantage of the break to price some business in both soybeans and corn.
Inflation worries and forecasts for a dry U.S. summer sent shivers through CBOT markets this week, with corn reaching a 10-year high and soybeans at 2-1/2 year top.
Traders expect volatility to keep climbing as we move into the spring planting and summer growing seasons — traditionally the most volatile times of the year.