Headlines:

  • SocGen ‘positive’ on corn price outlook, sees scope for soy gains
    Societe Generale said it had turned “positive on the outlook” for corn prices, and flagged scope for gains in soybean futures too, but cautioned for prospects for sugar values, and for the arabica-robusta coffee spread. SocGen – nudging higher by up to $0.20 a bushel, on a quarter-average basis, its forecasts for Chicago corn futures – flagged the boost to price prospects for the grain from a sodden US spring, which prompted the bank to lower to 168.5 bushels per acre its forecast for this year’s yield. The US Department of Agriculture pegs the yield at 170.7 bushels per acre. “In addition, we believe that continuous, above-normal rainfall could restrict the replanting of acres already impacted by heavy flooding in the key growing regions of the US,” said SocGen analyst Rajesh Singla. The bank acknowledged that record corn output in Latin America would undermine US export prospects, but forecast nonetheless US corn stocks falling to about 1.7bn bushels by the close of 2017-18, well below the 2.11bn bushels that the USDA has factored in. “We maintain our neutral view on corn [prices], but have turned positive on the outlook, given the challenging weather in the US,” the bank said, foreseeing prices trading in a range of $3.80-4.50 a bushel in December, while averaging $3.90 a bushel over the October-to-December quarter.

Summary:

The grain and Soybean markets faded from intraday highs over the course of the day but Corn and Soybeans were still able to finish the day in positive territory. July Corn settled 1 ½ cents higher and July Soybean was up double digits in the tune of 11 ¼ cents. The USDA Weekly Export Sales numbers were released today. Corn came in in the middle of trade expectations, Soybean was near the high end of expectations while Wheat suffered well below expectations.

Corn futures have essentially been range bound since late March this year and on a couple of occasions this week has flirted with breaking the top end of resistance. For the July contract, we would have liked to have seen a close above 375. A closing above that level would have pointed to a higher probability of price reaching the 390 to 400 area within the next 2-3 weeks. The high today was 374.75. Soybean futures had been in free fall prior to Tuesday where it found support against our ‘unit’ of price per day natural trendline. In the included chart, that trendline is the red upward sloping line below the current price action. The market consolidated the over the last few days and was able to find some legs today. Overhead resistance rests at 938.25 for this contract right now. At around noon eastern yesterday, Wheat made low from which a price advance persisted through the regular trading session open this morning. From there it gave up its gains finishing the day flat.

 

In our weekly market audio update Wednesday, we shared that December Cotton futures was at a critical junction in both time and price. We showed where we projected May 28th was potentially a timeline for a market inflection. The 28th fell on a Sunday so the next available trading day to be able to take action was on Tuesday the 30th. We suggested that trading above the Tuesday high would be a buy signal and that the 72.27 was sell. On Wednesday, a buy signal fired off and on Thursday price rallied close to resistance at our overhead natural trendline. The price action saw some profit taking today.