CHICAGO, May 14 (Xinhua) -- CBOT agricultural futures rose slightly in the past week as India has banned wheat exports.
As the Russia-Ukraine conflict goes on with no end in sight, Chicago-based research company AgResource stays bullish of grain, saying any modest breaks will provide new purchase opportunities.
Corn futures ended the week mixed with new crop gaining on the old as long-term bullish ideas are increasingly being centered on the 2022-2023 crop year. The wheat market has shown a lack of tolerance for supply dislocation. Corn will follow wheat to new rally highs if Central U.S. weather is anything but ideal.
The spot market has consolidated at near-record prices amid a recent slowing of export sales and weaker-than-expected weekly ethanol production. However, downside risk in old and new crop contracts is limited.
The need to ration global wheat supplies bodes favorably for global corn feed use throughout 2022-2023. AgResource stays bullish with new highs forecast should Central U.S. weather turn adverse.
Wheat futures worldwide broke out to the upside as Europe is added to the list of production concerns amid developing drought. And India has banned exports except to a few food security stressed countries. North America's climate shows no signs of improvement with spring wheat seeding pushed into late May and June and rapid drought intensification returns to the U.S. Southern and Western Plains. Sizable supply dislocations are occurring amid the conflict in Ukraine. AgResource suggests that ultimately supply rationing rally will be needed in autumn/winter unless peace is reached in Ukraine in the near future.
There is some uncertainty over the pace of Russian exports July onward, when the current quota system ends. But there is no doubt that balance sheets in the United States, Europe, Canada, Australia and Argentina will be historically tight.
AgResource maintains that fair value in the second half of 2022 lies between 12-14 U.S. dollars for U.S. wheat futures. Fully replenishing U.S. and exporter balance sheets will take at least two crop years.
Soybean futures finished the week with solid gains. July soybeans finished the week 24.5 cents higher.
The National Oilseed Processors Association (NOPA) will be out with April crush data on Monday. Historic soybean prices have not slowed domestic crush or exports. Demand rationing is needed with record large outstanding old crop sales and record large new crop sales. The U.S. soybean export rate will be historic over the next nine months.
AgResource maintains a bullish outlook, with old and new crop prices advancing to new highs as the need to ration supply stays acute. There is no tolerance for a yield fall.