Thu, 27 Jan 2022

Roundup: CBOT agricultural futures stay firm

29 Nov 2021, 02:30 GMT+10

CHICAGO, Nov. 28 (Xinhua) -- Chicago Board of Trade (CBOT) agricultural futures stayed firm in the past week as a new COVID-19 variant detected in South Africa could cause governments to issue closure notices, Chicago-based research company AgResource noted.

AgResource does not foresee a lasting bear market on strong world demand and tightening supplies, though the new variant could produce long liquidation heading into the end of the year. AgResource stays longer term bullish, but said this is not the time to be chasing a rally.

Corn futures ended firm despite long liquidation. March corn continues to struggle above 5.85 U.S. dollars amid a lack of export excitement and as positive soil moisture anomalies are present across much of Argentina. The market lacks the spark needed to push values to newer seasonal highs. Uncertainty over COVID-19's impact on U.S. driving patterns will weigh on rallies in the near term.

Longer price direction will be centered on December-January weather in Argentina and southern Brazil. AgResource notes that conditions there so far have been favorable. However, climate guidance has been consistent in projecting arid weather there throughout the winter months. It remains that the loss of just 5 million metric tons of South American production pulls exporter corn stocks/use to a new record low, which demands a test of 6.50 dollars. Additionally, Chinese buying of U.S. corn is expected in the first quarter of 2022.

AgResource advises end user buying below 5.75 dollars for March contract. Cash sales are on hold until more is known about South American yield potential. Favorable weather will be needed worldwide in 2022 to build global corn stocks.

Wheat futures ended higher this week with high-protein markets gaining on Chicago amid renewed concern over milling wheat supply availability. Soaking rain will impact key areas of eastern Australia this weekend. This will trigger downgrades to quality there and already protein has been disappointing in western Australia. A pattern of above normal rain is likely to persist in eastern Australia throughout December. Demand for milling wheat will be funneled to the EU and Black Sea which places new stress on the EU balance sheet. EU wheat prices must work to slow export demand or risk extreme supply tightness this spring.

Returned COVID-19 fears on global financial markets are reducing risk as future energy, food service demand will be debated. Yet, demand for wheat will not be materially impacted. AgResource advises end user to use additional weakness to boost supply coverage. A break should be followed by a push to new highs.

Soybean futures held a narrow range through the holiday-shortened trading week and were lower at Friday's close. The pre-holiday trade developed in a narrow range, with March soybeans finding resistance against major moving averages. A late week COVID-19 panic set U.S. and world commodity and other financial markets sharply lower, which pulled soybeans lower on Friday.

U.S. cash soybean basis was higher across the Midwest for the week. With harvest nearly wrapped, available cash supplies are tightening and both processor and export markets are raising bids. Nearby bids at export markets were mostly higher for the week.

South American weather should be watched for Argentina and southern Brazil. Cumulative rainfall has slipped below normal, while the 10-day forecast shows widely scattered amounts of rain. The next upside price target for sales rests at 13.25 dollars for March futures.

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