Soybeans could be next market to surge as US showers drag on

Bloomberg

Corn prices have been on an epic run. Now, soybeans could soon be catching up.
With more rains forecast for the US Midwest, oilseed plantings are under threat and hedge funds are backing away from their bearish wagers. Meanwhile, corn is heading for its
best quarterly advance since 2010 and the funds are betting there’s more room to run, raising their net-bullish holdings to the highest in a year.
Fields are still flooded, keeping farmers from seeding and threatening yields. Cooler and wetter-than-normal weather remains in the forecast. The US
Department of Agriculture will update its plantings estimate on June 28, but analysts and traders are already concerned the agency’s numbers will be too high and not fully reflect the
impact of the deluge.
“Most people would suggest this survey is a little dated,” Rich Nelson, chief strategist at Allendale Inc. in McHenry, Illinois, said, referring to the USDA report.
In the weeks and months ahead, the agency likely will have to take down estimates both for US soy acreage and yield to reflect major planting delays, Nelson said. That could boost soybeans prices that lagged behind corn’s big run. Most-active rolling futures are heading for a gain of about 5 percent this quarter, while the grain has surged about 27 percent.
Soybeans have trailed for a reason. In the US, the oilseed can be planted later in the spring than corn. Amid the heavy rains, some analysts had forecast that the weather would eventually clear and farmers would plant more soy. That would’ve meant bigger production at a time when demand is already suffering amid the US-China trade war.
But with more showers in the forecast, that scenario is becoming less likely.
“After the corn problem was realised, everyone started shifting their focus to beans,” Terry Reilly, senior commodity analyst at Futures International LLC in Chicago, said by phone.