Soybeans began the New Year by breaking an upward trend and corn prices rose as traders readied positions for next week’s anticipated moves by index funds, according to analysts.
January soybeans fell 9 ¾ cents Tuesday to $9.86 ¾, while March corn went up 3 ¾ cents to $3.55 ¾. Chicago March wheat slid 1 ¼ cents to $4.06 1/5. The market was influenced by managed money and weather, according to analysts.
Tuesday’s futures were driven by “anticipation of index funds’ portfolio rebalancing next week since with such big gainers in 2016 the expectation is that they will have to sell,” and by South American weather forecasts, explains Arlan Suderman, chief commodities economist at Intl FCStone, in Kansas City, Mo.
“There are general favorable South American weather forecasts, with expectation of drying out in the northern half of Brazil, though much of the crop wouldn’t be affected,” he says.
There also may be an excess of rains in Argentina, however, Suderman adds.
Wheat also is expected to get buying support from index funds’ rebalancing next week, although it remains under pressure from a worldwide glut and the strong U.S. dollar, he says.
The managed money funds’ position has been unchanged for many months, notes Joe Vaclavik, president and founder of Standard Grain in Chicago
“Funds are long the beans market, they’re heavily short the wheat market, and they’re heavily short the corn market,” he says.
Despite the increase in March corn Tuesday, “the corn market remains confined to what has been a long term trading range,” according to Vaclavik.
Markets also are anticipating USDA’s crop production report next week, along with the agency’s quarterly grain stocks report.