CBOT agricultural futures close mixed

CBOT agricultural futures ended mixed for the week as the U.S. Central Bank is preparing to raise interest rate by 0.75 percent again this week.

The odds that U.S. and world central banks will be able to orchestrate a soft landing are in decline as inflation appears to be sticky, said Chicago-based research company AgResource. As the outlook for agricultural futures is complex with tight supply battling faltering demand, the company sees agricultural futures in wide range trade into 2023.

December corn scored a new high rally following the release of bullish U.S. Department of Agriculture (USDA) data, but was corrected following addition of supply premium. Fear remains in the market that final U.S. yield will drop to 170-172 bushels per acre.

Most important is that U.S. export commitments are down 50 percent from last year as of mid-September, said AgResource, adding that this validates the change in grain flows that has occurred since the return of Ukraine’s FOB market.

U.S. Gulf corn this weekend is the world’s most expensive origin and export demand is unlikely to improve until South America’s surplus is exhausted in November-December, the company said, noting that a reduction in exports is likely to offset a further trimming of production.

Supply-based rallies will be rewarded, and 7.00 dollars for December corn is targeted nearby, with additional selling opportunities probable in late autumn if drought stays in place across Argentina, it said. USDA for the first time since 2012 projects global feed consumption to contract year on year. This places support at 6.00 dollars.

World wheat futures closed mixed on the week with CBOT contracts falling slightly and December Kansas wheat scoring a new high weekly settlement. Bearish input continues to be Russia’s massive surplus and aggressive FOB offers, which as of this weekend remain 30 dollar/ton below European wheat and a full 100 dollar/ton below U.S. Gulf hard red winter wheat. Black Sea grain continues to flow and Russia’s record 2022 production has acted as a weight on rallies.

However, premium is being added as the future of Russian and Ukrainian exports is being questioned, said AgResource, adding that seasonal price trends are positive into winter.

November soybean futures finished the week firm but were well under the early week highs. Soybeans rallied at the start of the week following bullish USDA September reports, which surprised the trade with 580,000 fewer harvest acres.

The bullishness in the soybean balance sheet was compounded by a 1.4-bushel-per-acre (BPA) cut in the national soybean yield, which dropped to 50.5 BPA. The net result was a 153-million-bushel decline in production and a 45-million-bushel decline in 2022-2023 end stocks. The price forecast was unchanged at 14.35 dollars per bushel, according to AgResource.

After an unprecedented delay, the USDA has released three weeks of export sales and shipment reports. The data lacked a bullish surprise for the soybean market, and the CBOT prices slipped following the report.

AgResource said the soybean market could be caught in a wide range of 13.50-15.00 dollars assuming a dire drought does not develop for South American production.

Tags: Market, corn, grain, soybean, Production, wheat, yield, U.S., CBOT, futures