Chicago Board of Trade (CBOT) agricultural futures fluctuated and closed mixed in line with weather forecast in the past week, said Chicago-based research company AgResource.
As CBOT will shift from being weather driven to being demand driven soon, AgResource maintains a bullish outlook for agricultural futures based on surging world demand, with record high freight rates being the testament of this demand.
Meanwhile, world wheat, soybean and corn markets are at record low on exporter stock/use ratios, which should offer a similar demand-led bull market.
CBOT corn futures ended lower amid late week selling and hope for a massive Central U.S. pattern change in August. But confidence is high that crop stress persists across the Plains and Northwest Midwest in the near term.
It’s all weather and yield perception nearby. However, world milling and feed wheat markets are rising seasonally. Feed importers must return to the U.S. corn market this autumn, as Argentina can only provide so much and spot interior corn in Brazil is quoted some 1.40 U.S. dollars per bushel above U.S. Gulf FOB corn. Brazilian exporters cannot compete with the domestic market and exports there will be minimal until safrinha harvest is fully complete in mid/late August.
The outlook is bullish. The market’s narrow focus on U.S. rainfall will fade beyond the next 30 days. A demand-driven bull will resurface in autumn and winter.
Wheat futures were mixed this week, with winter wheat contracts ending firm and spring wheat futures ending slightly lower on speculative profit taking. The wheat market’s short- and long-term themes are unchanged and both lean bullish. Russian winter yields remain disappointing and final crop size there is pegged in a range of 79-81 million tons. Historic drought will persist in Canada into August, which on the margin will reduce North American supplies by another 6-8 million metric tons.
The rapid tightening of exporter stocks/use along with elevated feed consumption in the United States and Europe will extend wheat’s bull run for another 6-8 months.
Wheat markets worldwide have bottomed. The return of corn export demand to the United States lends further support into the winter months.
Soybean futures fell back to 14 dollars as traders keyed off the late week extended weather model forecasts that projected needed rain across the driest parts of Iowa, Minnesota, and the Northern Plains. However, there is minimal rain projected for the Western Plains, and more importantly, well above average temperatures are projected across the region. U.S. soybean crop condition ratings were up 1 percent last week at 60 percent, but still below average. Crop conditions take on increased importance as July draws to a close. The market remains sensitive to the extended weather forecasts amid the tight U.S. balance sheets.
With August crop report to be out in three weeks, AgResource looks for broad-ranging trade with heightened volatility to unfold in the coming weeks, with support in November soybeans being expected below 13.25 dollars. AgResource stays bullish on a further correction.
Source: Xinhua