CBOT agricultural futures perform mixed

CBOT agricultural futures were mixed in the past week on demand concern related to rising U.S. and world interest rates and the potential recession that could follow.

U.S. Labor Department will release August inflation reading which is expected to hold above 8 percent. Chicago-based research company AgResource sees high odds that the Federal Reserve will raise rates by 0.75 percent to 3 percent.

The outlook for agricultural futures is complex with tight supply/stocks battling faltering demand. Corn futures have extended the recent supply-driven bull run as the Department of Agriculture is expected to trim U.S. corn yield by 2-4 bushels per acre (BPA) in its september crop report due out Monday. A sub-172 BPA yield will trigger the need to slow consumption via higher prices.

AgResource’s outlook leans modestly bullish into late autumn/winter as there is now little/no chance global production can match consumption even assuming normal weather in South America.

Demand cuts lie ahead as world banks raise lending rates. This rally is based on supply, it is demand that AgResource worries about due to slowing trade amid a soaring U.S. dollar and weakening usage.

Wheat futures ended higher as markets outside of Russia continue to carve out seasonal lows. U.S./EU wheat futures often find annual bottoms by the middle of September. And amid record low 2022-2023 combined stocks/use in non-Black Sea exporting countries, AgResource expects a strengthening wheat price trend to hold.

Russian FOB (free on board) offers remain deflated as the market seeks a price that clears incredibly large inventories. Massive Russian wheat stocks will hang over the market well into mid-2023. But if combined Russian/Ukrainian wheat exports fail to reach 5.0-5.5 million metric tons per month in autumn/winter, global demand will be funneled to the United States. It is difficult to set upside price targets amid the uncertainty surrounding the Black Sea trade. The importance of Black Sea wheat availability cannot be understated in the eight months left in the crop year.

Soybean futures were under pressure throughout the holiday-shortened trading week. The week’s decline was led by sharply lower soymeal and oil futures that were under pressure from the subsidized soybean dollar trade in Argentina. Argentine farmers have been slow post-harvest sellers as the black-market peso continues to trade far below the official exchange rate.

November soybeans have traded around 14 U.S. dollars, but lasting rallies over 14.50 dollars will have to be led by a South American weather problem.

Tags: price, CBOT, prices, futures, soybeans, soymeal, Outlook, demand, Production, recession, wheat, soyoil, crop, yield, inflation, corn, U.S.