Chicago Board of Trade (CBOT) agricultural futures closed lower amid positioning in the past week, Chicago-based research company AgResource noted.
China has been securing U.S. soybeans and is said to have interest in U.S. corn under current levels. Whether China uses this break to add to its forward purchase coverage will be closely monitored. AgResource stays bullish amid rising post pandemic demand, holding any 2-3-week corrections offer new purchase opportunities.
CBOT corn ended lower as the Midwest rainfall and U.S. Supreme Court’s decision to allow the Environmental Protection Agency (EPA) to grant small refinery biofuel waivers accelerated liquidation.
Market input since mid-June has been negative as soil moisture gets recharged across the Eastern Midwest with traders fearful of a substantial hike in U.S. corn seeding. U.S. Department of Agriculture (USDA) Stocks and Seedings data due out on June 30 will reset the balance sheets. But reduced carryover adds to the burden of yield performance, while extreme dryness persists across the Plains, Northern Iowa, and Minnesota.
AgResource notes that corn can only relax once exporter production exceeds consumption for at least two consecutive years, as corn has found a new plateau in the medium term.
AgResource is expecting new highs for corn based on U.S. demand as exports, ethanol and feeding combine to further drop 2021-2022 stocks.
Spot CBOT wheat futures went down 31 cents. A worsening of spring wheat yield loss is anticipated into mid-July, which is having material impact on U.S. all-wheat stocks. U.S. 2021-2022 end stocks drop to 600 million bushels. This reflects a new dynamic in the U.S. wheat market as acreage expansion has not been needed since 2014.
Spring wheat yield issues have also expanded in Canada, Russia, and Kazakhstan amid extreme heat/dryness in those countries. A further tightening of the major exporter balance sheet in 2021-2022 suggest downside risk below is severely limited, and much better selling opportunities are due after harvest.
Soybeans fell on a mix of positioning ahead of the June 30 USDA report, Midwest rains, and U.S. Supreme Court’s announcement of EPA’s authority to grant small refiner waivers.
China booked additional U.S. new crop soybeans. Climbing Brazilian FOB basis is also increasing the odds of U.S. old crop sales.
Crop ratings are likely to stabilize following recent Midwest rains. AgResource looks for U.S. soy seeding to expand 900,000 acres to 88.5 million acres. The price risk is to the upside following the USDA report on record large U.S. demand via crush and exports.
Source: Xinhua