CHICAGO, Nov. 16 -2020
CBOT agricultural futures staged a mixed performance in the past week, while technically the agricultural futures are in a bullish position with the value of the U.S. dollar likely to decline.
Meanwhile, Chinese economic demand looks to stay strong, and Chicago-based research company predicted that broad commodity prices will stay bullish.
CBOT corn ended slightly higher following the bullish November crop report and another uptick in weekly ethanol production.
Long-term price direction centers on U.S. export demand, U.S. Department of Agriculture projected U.S. corn exports in 2020-2021 to be a record large 2,650 million bushels, and this number may swell to 2,900-3,000 million bushels if Argentine production falls below 45 million metric tons due to La Nina-based drought.
The odds of adverse weather for Argentina and southern Brazil are rising. Model guidance across Argentina is drier than normal into mid-December.
The CBOT is awaiting China’s return for U.S. corn with hope of new sales in coming weeks. AgResource suggested it is closely following South American weather and Chinese demand for world corn to gauge upside price potential into March.
U.S. wheat futures ended weaker. Russia announced its long awaited 2020-2021 grain export quota system this week, and the quota is viewed as bearish as Russian exporters will be allowed to sell and ship wheat without restriction over the next 100 days.
The arrival of Aussie supply will weigh on Black Sea shipments into Asia in early 2021.
The wheat market lacks compelling fundamental input into spring as North Hemisphere crops enter dormancy.
A lasting break is unlikely as the global corn outlook is bullish and as world wheat importer demand remains stout.
Choppier price pattern ahead predicted by experts.
Poor crop establishment across the U.S. Plains and Southwest Russia mandates favourable spring weather if a lasting bearish pattern is to develop in mid-2021.
Meanwhile demand from China has soared in the USA market .
In the first phase of Mr Trump’s trade deal, announced in January, China agreed to buy an additional $200bn-worth of American goods in 2020-21.
Even without the deal, Chinese demand for crops would probably have been robust.
The country is keen to expand its herds of hogs, decimated last year by African swine fever. That is raising demand for animal feed, such as soybeans.
Anxiety about food security means the government is refilling stockpiles, too.
US Ag expects Chinese wheat imports to reach the highest level in 25 years, with total imports of corn and other coarse grains setting a new record.
Little surprise, then, that export prices for American corn and soybeans have sailed above $220 and $470 a tonne, respectively, up by about 60% and 50% from their 52-week lows.
But bulls should not be too confident. China’s buying may ebb if it seeks a different trade deal with America’s president-elect, Joe Biden.
Exports of American corn are poised to reach a record of 67.3m tonnes for the marketing year that began in September, according to forecasts by the United States Departure of Agriculture Demand for corn and soybeans may push American stocks to their lowest levels in seven years.
By the time markets closed after the US Ag report, the most actively traded corn and soybean futures contracts had jumped to $4.23 and $11.46 a bushel, respectively, with corn up by more than a third since early August and soybeans at their highest price in over four years.
They may rise higher still.
Prices are climbing, in part, due to bad weather.
Wet conditions prompted some American farmers to avoid planting and collect government crop insurance instead, notes a research firm. Other farms suffered a dry August.
A derecho, or wind storm, blasted across the Midwest, with gusts of more than 100 miles per hour.
Farmers elsewhere have also experienced dismal conditions.
Usually fertile fields near the Black Sea are producing less corn than expected. Production in Ukraine is expected to fall by more than 20% compared with last year.
