Sun, 17 Jan 2021

Roundup: CBOT agricultural futures in correction

Xinhua
06 Dec 2020, 07:51 GMT+10

CHICAGO, Dec. 5 (Xinhua) -- CBOT agricultural futures went into correction in the past week, Chicago-based research company AgResource commented.

U.S. dollar in 2020 is in fast retreat and expected to decline into at least the middle of 2021. The coming COVID-19 vaccine and growing odds of another one-trillion-dollar COVID-19 aid package will elevate U.S. economic growth back above 3 percent. AgResource remained bullish looking into mid-2021.

CBOT corn futures ended lower amid a shift to wetter weather across Northern and Central Brazil and a modest weakening of Black Sea FOB basis levels. The return of Chinese demand, probable 2021 Argentine drought and a further boost in U.S. exports sales will drive the market in the months ahead, said AgResource.

Nevertheless, significant tightening of U.S. and world supply and demand is expected in the first quarter of 2021. Final 2020-2021 U.S. corn exports are estimated near 3 billion bushels, which, along with a 25 to 50 million bushels hike to industrial use, will pull down end stocks to 1.3 to 1.4 billion bushels by the final count. Such stocks argue for a test of 4.50 to 4.75 dollars. Weather in South American will be key in the weeks leading into the end of 2020.

U.S. wheat futures ended sharply lower amid rising world production estimates. Updated crop estimates from Canada and Australia suggest that major exporter production may be raised by 3 million metric tons in U.S. Department of Agriculture (USDA) December report. There will be no shortage of exportable wheat supplies into 2021. AgResource held that bullishness must come from new crop supply threats.

Wheat will follow corn during South America's growing season. World wheat FOB cash prices are steady/higher on firming non-U.S. currencies.

Near-ideal spring weather in the United States and Russia is needed to turn wheat futures bearish, and that will not be known for months, AgResource noted.

Soybean futures closed nearly 30 cents lower in the week. It failed to exceed 12 dollars to open the week. Profit taking followed as a more normal pattern of rainfall will be established across Northern and Central Brazil. Concern over growing conditions in Argentina and far Northern Brazil remain elevated.

U.S. October soybean exports were a record 420 million bushels and another record U.S. crush rate is forecast in December. U.S. soybean demand is accelerating, not declining at four-year high prices. AgResource predicted that weather in South American and the need for U.S. soybean demand ration will underpin any modest CBOT break.

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