CBOT agricultural futures drop on lack of demand

Chicago Board of Trade (CBOT) agricultural futures dropped in the past week on lukewarm demand and yield increase concerns, Chicago-based research company AgResource noted.

The U.S. House of Representatives on Friday passed a bipartisan 1-trillion-U.S.-dollar infrastructure bill which is expected to underpin commodity market. While a correction is needed, AgResource holds that there is no evidence that the U.S. inflationary pressures have been solved, and suggests securing sharp breaks.

Corn futures ended weaker as the focus returns to U.S. and Black Sea yields and supply. The demand market paused for a week. U.S. corn export sales are keeping pace with the U.S. Department of Agriculture’s (USDA) annual forecast, but 2020-2021 steady monthly upward revisions are unlikely unless South American weather turns adverse.

A range of 5.40-5.90 dollars for spot CBOT corn is probable with any modest bearish USDA report expected to illicit new buying on the “corn is fertilizer” investment theme. The situation of falling corn and rising fertilizer prices over time is unsustainable. Acute focus on Argentine precipitation is warranted as La Nina strengthens. AgResource advises end users to add to coverage below 5.50 dollars and sell above 5.90 dollars. The risks in the market are up on heightened inflation.

U.S. wheat futures ended lower led by profit taking in Minneapolis wheat from the bulls. Elevated volatility should be expected when prices are at 8-year highs and as every metric ton of demand is counted on a weekly basis.

Importers were less active this week but breaks in the market will encourage consumption, especially with the sharp decline in world freight rates. Major importers are still only covered through early winter and are expected to return with new demand following USDA November report.

AgResource holds wheat’s longer term bull trend stays intact, with initial price target of 8.00-8.20 dollars reached this week and a final upside goal of 9.00-9.50 dollars. Use early week weakness to return long with key chart support nearby, AgResource advises.

Soybean futures set weekly highs early in the week and collapsed in late-week trade on long liquidation ahead of USDA’s November Crop Report. The trade fears that the USDA could raise the U.S. soybean yield and lower the forecast for U.S. soybean exports.

The USDA weekly export sales report shows U.S. soybean export commitments at 1,187 million bushels, down 33 percent from last year. Typically, 70-75 percent of annual soybean exports are booked by mid to late November.

The USDA’s soybean balance sheet will add stocks, but key support at 11.75-12.000 dollars is not far away and the heart of the South American growing season will occur from early December into February. Dryness is becoming an issue across Southern Brazil and Eastern Argentina.

XINHUANET.com

Tags: soybean futures, corn futures, Chicago Board of Trade, CBOT, agricultural futures, Fertilizer prices, wheat futures