CHICAGO, Oct. 16 (Xinhua) -- Performance of Chicago Board of Trade (CBOT) agricultural futures was mixed in the past week as the October Crop Report and the World Agricultural Supply and Demand Estimate (WASDE) report released by U.S. Department of Agriculture (USDA) were slightly bearish.
But Chicago-based research company AgResource remains bullish on CBOT agricultural futures as worldwide demand keeps picking up.
December corn ended weaker, but only slightly amid late-week speculative and end user buying. USDA in its October report stripped the market of major supply concerns by leaving national yield near unchanged, which along with slightly higher 2021-2022 carrying supply kept stocks/use at 10 percent. Such stocks/use will keep spot CBOT bound to a range of 5.10-5.40 dollars until clearer yield picture emerges in late October. AgResource maintains a bit more pessimistic on final yield given current crop ratings and as recent reports from the Eastern Midwest do not align with USDA forecasts.
The bigger story is one of incredibly profitable end user margins. AgResource calculates the spot ethanol production margin at 1.10 dollars per bushel. U.S. Gulf corn is the cheapest feed supply in the world for delivery between now and late winter. It is just tough to be bearish of corn amid rising demand potential. And Argentine dryness lingers in the background. Drought in Argentina changes corn's market dynamics significantly. AgResource holds strong support sits at 5.00 dollars.
U.S. wheat futures ended steady to higher amid bullish USDA data. U.S. corn and soybean balance sheets have loosened. But USDA was forced to peg exporter wheat stocks/use in 2021-2022 at a record low 12.69 percent amid downward revisions to production in the United States, Canada, and Kazakhstan.
AgResource expects export/stocks use to tighten further as global trade must be raised. Mid-East and North African import demand is understated by some 5-7 million metric tons. This is a big deal and implies that Northern Hemisphere acreage expansion of some 5-6 million is needed to solve wheat's supply issues in crop year 2022-2023. Russian seedings are already projected to decline slightly year on year.
The outlook remains bullish. CBOT wheat is projected to test 7.75-8.25 dollars prior to December contract expiration, and a lasting high is not expected until early/mid-winter. There will be no tolerance for yield loss moving forward.
Soybean futures were under pressure from follow-through selling in the first half of the week and clawed back losses in the last half. Late-week support developed on firming cash markets and confirmation of building export demand. The weekly export report showed exports reached a marketing year high of 63 million bushels last week with weekly sales expanding to 42 million bushels.
Additionally, USDA make daily sales announcements during the week that totaled 56 million bushels.
Soybean harvest last week had reached 49 percent and is expected to be beyond 65 percent this week. As a result, cash markets are firming, and the seasonal outlook is bullish.
However, the Brazilian exports will be available 30-45 days earlier than a year ago.
AgResource looks to advance soybeans sales on strong rallies in the coming weeks.