Mon, 19 Apr 2021

Roundup: CBOT agricultural products keep uptrend

Xinhua
28 Feb 2021, 05:49 GMT+10

CHICAGO, Feb. 27 (Xinhua) -- CBOT agricultural futures kept uptrend in the past week, on enlarging world import demand and likely adverse weather condition in U.S. Plain and South America, Chicago-based research company AgResource noted.

May CBOT corn ended the week 7 cents higher as upside price risk shifts towards new crop. U.S. Department of Agriculture (USDA) expects corn stocks to build only marginally in 2021/2022 even assuming record yield. Seeding intentions and April-May planting conditions will have an oversized impact on price as well as old/new crop spreads. Supply will remain in focus in coming weeks.

Argentine exporters have begun selling new crop supply into world market at prices lower than in the United States, otherwise there's little or no competition for export demand prior to the arrival of Brazil's crop in August. Chinese import demand growth mandates a record Northern Hemisphere crop.

In the near-term, enlarged U.S. export shipments and confirmed crop losses in South America are needed for spot CBOT to test the contract high. AgResource maintains that U.S. end stocks of old crop and new crop corn will be near 1 billion bushels.

U.S. wheat futures ended mixed. Russian cash trade remains absent from the marketplace, which elevates uncertainty but is also funneling world import demand away from the Black Sea to other origins. The European market remains firm amid record low supplies. The market focus will very soon shift to new crop growing conditions. ARC holds that wheat's downside is severely limited below 6.40 dollars. A longer term uptrend line remains intact.

Adverse weather or an extension of Russia's absence from the market may propel U.S./EU futures to new highs in mid/late summer. Even enlarged production in the Black Sea/Europe will be absorbed quickly amid record global consumption. ARC suggests further breaks be used to extend supply coverage, as drought in U.S. Plains shows no sign of breaking between now and at least late March.

Soybeans finished higher last week and closed the month above 14 dollars for the first time since May 2014.

AgResource sees the long-term bull market as intact. However, the transition of world export demand from North America to South America has turned the market in a broad range. U.S. stocks will further tighten amid strong processing margins and expectations for record crush rates in the coming months.

If Brazilian and Argentine soybean crops are large, there is chance that soybean prices could have formed a seasonal high at 14.46 dollars as U.S. export demand implodes on expensive FOB offers. Adverse weather in South America is needed to keep the old crop rally going. Bullishness will now be shifting to new crop.

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