Wed, 14 Apr 2021

Roundup: CBOT agricultural futures spiral upward

Xinhua
07 Mar 2021, 05:30 GMT+10

CHICAGO, March 6 (Xinhua) -- Grain markets spiraled upward on concerning weather in South America.

Chicago-based research company AgResource maintains a bullish view on agricultural futures.

May corn ended unchanged following renewed late week bullish enthusiasm. AgResource maintains that it's new crop futures that are the most undervalued. The need for U.S. area expansion of 2-3 million acres and near-perfect summer weather are very real.

Corn price in the near future will hinge on weather in South America. In Argentina, a pattern change to wetter conditions is unlikely until April. Crop health is eroding quickly, and stress will accelerate amid the weekend's heat.

The U.S. Department of Agriculture's (USDA) forecast for Brazilian crop also implies that safrinha yields must be immune to abnormally late seeding dates, which is highly unlikely. A Brazilian crop loss, following production shortfalls in the United States, Ukraine, and Argentina, turns the market into one that must ration supply via higher prices. It is all about weather/supply into late summer, as worsening South American crop prospects are turning corn's outlook more bullish.

U.S. wheat futures ended slightly weaker amid limited market-specific news as major importers remain absent from the marketplace. New crop EU offers are quoted some 40 dollars per metric ton below old crop, and there's speculation that importers will draw down stocks and wait on the new harvest before renewing bulk purchases.

Nevertheless, the value of wheat will be determined solely by supply/weather rather than importer purchasing. The U.S. balance sheet tightens even assuming trend yields, with all-wheat stocks falling below 700 million bushels if U.S. Plains drought persists. AgResource remains bullish of wheat.

Soybean futures were higher throughout most of the week and ended with a rally to mark the highest weekly close since 2014. Weather concern for crops in Argentina and Brazilian crops sparked a late week rally, as 15 percent of the Argentine crop was rated poor last week.

Harvest in Brazil continues to advance with 67 percent of the Mato Grosso crop now gathered. This is the slowest harvest in a decade. Meanwhile, crop quality concerns abound due to excess late-season rains across Northern Brazil.

In the United States, new crop soybeans will find support on breaks near 12.00 dollars before the release of the Prospective Plantings report. The market needs to be assured of at least 90 million acres.

Soybean is expected to find support if it falls back to 13.75-14.00 dollars, but more likely expects new highs if the Argentine forecast stays dry. AgResource stays bullish as the crop outlook in South America worsens.

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