Chicago (US), November 1: Chicago Board of Trade (CBOT) agricultural futures went higher in the past week on strong market demand, Chicago-based research company AgResource noted.
Though advising a bullish outlook, AgResource also cautioned that this bull market is becoming mature as a further rally in U.S. dollar could help step down inflationary pressure.
CBOT corn futures ended sharply higher as the market begins to better digest this year's demand potential. It is becoming easier to see that U.S. Department of Agriculture (USDA) ethanol grind forecast is 150 million bushels too low, while U.S. corn's FOB discount against Ukrainian origin bodes positively for export demand into early 2022.
The unknown is USDA's November Crop Report. If USDA fails to raise U.S. corn production, a more bullish price pattern may unfold amid improving demand tied to rising energy prices.
There will be no tolerance for La Nina-based dryness in Argentina this winter, with even modest losses pulling exporter corn stocks/use to a new record low. AgResource has raised key support for December corn to 5.30 and 5.40 dollars with a tradable top to be scored early in the week ahead.
U.S. wheat futures ended higher this week with spring wheat futures in Minneapolis perched well above 10 dollars. New contract highs were scored in Kansas and European markets. Extreme exporter balance sheet tightness and Europe's need to slow future exports are primary drivers of price.
The long-term outlook remains bullish as record low exporter stocks/use cannot be avoided in 2021-2022. However, large Southern Hemisphere crops will hit the global marketplace in the next 30 days, and the burden on Northern Hemisphere exporters will be lessened over the following three to four months. The market must also see continued importer interest at current wheat/freight prices to sustain buying interest.
As the arrival of Southern Hemisphere harvests and the push by Russian exporters to move supply offshore look to produce temporary top, AgResource holds CBOT wheat may trade in a range of 7.40 to 8.00 dollars until more is known about world demand.
Soybeans traded firmer through the week and were up 15 cents at Friday's close. Soybean processor bids are strong as the harvest was slowed by widespread Midwest rainfall. Meanwhile, estimated crush margins are averaging 2.3 dollars per bushel across the Midwest.
While the domestic processor markets held firm, export markets were higher as barge freight rates fell.
While near-term demand looks strong, Brazilian new crop soybean offers are as much as 0.65 to 0.85 dollars under U.S. January offers. As the window for U.S. exports closes a little more each day, AgResource suggests cash sales on rallies to 12.70 to 12.90 dollars for January soybeans.
Source Xinhua