CHICAGO, Aug 28 (Xinhuanet) – Chicago Board of Trade (CBOT) agricultural futures closed higher last week as global agricultural demand shifts to the United States, Chicago-based AgResource found.
A weaker US dollar will draw fresh funds into the US agricultural futures markets towards the end of the year, as a falling US dollar would increase the purchasing power of other nations.
CBOT corn futures ended the week higher and the seasonal recovery process begins. AgResource can’t rule out a second test of $ 5.30-5.35 for the December contract, but the downside risk is getting smaller.
Most importantly, US export demand is beginning to respond to the increasing competitive position of US corn in the world market. The shift in demand to the US market has been slow, but importers have no choice but to increase forward feed coverage of US corn by the first quarter of 2022. The rapid development of La Nina is also due to its strong correlation with drought in Argentina and southern Brazil.
Record low in US corn inventories / uses and exporters forecast in 2021-2022. Additional US supply losses increase the upside to $ 6.5 to $ 7. Corn is a perennial bull market with demand to be the bullish leader through 2022.
US wheat futures rebounded. Statistics Canada is projected to pin Canadian production at 21-22 million tons on Monday, which siphons another 2 million tons of Canada’s exportable surplus amid already tight inventory levels.
Wheat’s balance sheet problems are significant, and those problems cannot be resolved before the Northern Hemisphere harvest next summer.
The upward trend of CBOT wheat is clear. Importers still use a modest weakness to increase future supply coverage. AgResource notes that most of the major importers are only covered until mid-fall and additional demand is expected due to global wheat weakness.
The United States is expected to increase its share of world trade from the end of the year as importers have no choice but to leave traditional EU and Russian markets. The upward momentum will resume once the corn crop is defined in the northern hemisphere and feed markets begin to catch up on the recent global wheat rally.
Soybean futures made up losses earlier in the week and closed higher on the week. CBOT soybean lows were set on bearish news related to the U.S. EPA’s soybean oil mandates.
AgResource doubts the EPA’s cut in biofuel requirements in 2020 or 2021, if any, will have a major impact on U.S. ethanol or biodiesel production. The trader’s interest is gradually shifting away from the yield towards the imminent demand. Sales of new crops have been delayed as end consumers shied away from the high prices. However, the window of time for a seasonal CBOT decline is getting smaller, with seasonal trends being higher after September 1st. End consumer demand will improve well into November.
The U.S. Department of Agriculture (USDA) announced sales announcements to China and undisclosed destinations totaling just over 19 million bushels during the week. Chinese crush demand is likely to average 73 to 75 million bushels per week in the coming year, while US sales to China are lower than last year. Daily US soybean sales to China should be regular with less than $ 13 support for the November contract. US soybean yields below 49 bushels per acre (BPA) must be confirmed to support a rally above $ 14.5.