CHICAGO, March 19 (Xinhua) — CBOT agricultural futures went into correction as grain futures fell, with the Russia-Ukraine conflict remaining a big player in the daily performance of commodity markets.
Chicago-based research company AgResource holds that CBOT will have a choppy trade in the weeks ahead to correct its overbought condition.
Corn futures ended lower as the market finds near-term equilibrium. Neither old nor new crop futures can break prior to summer amid record U.S. export disappearance. New bullish fuel is needed to propel May above 7.75 dollars ahead of U.S. Department of Agriculture (USDA) Stocks/Seeding report.
Additionally, broadly favorable weather in central Brazil will keep safrinha crop ratings high into late March or early April. Brazilian exporters will undoubtedly be more aggressive with export sales once supply becomes available in mid-summer.
AgResource maintains that Ukraine’s old crop surplus has been lost to the world market. Production there is unlikely to exceed 20-22 million metric tons, as against 42 million metric tons in 2021-2022, amid input/logistics challenges. This will trigger a new bullish phase, but the length of the Black Sea conflict is not known yet. No exporting country can come close to replacing the potential loss of Ukrainian corn exports worth 15-20 million metric tons in 2022-2023. This will only be solved in the long run by favorable weather and record South American acreage.
U.S. and European wheat futures ended lower for the week as the volume of trading collapsed as few want to place large bets amid massive market volatility. Traders that remain are adding and subtracting geopolitical conflict premium on a nearly daily basis and risk management remains challenging.
However, AgResource doubts that the conflict in Ukraine will end by summer. Ongoing conflict will keep Ukrainian port shuttered while sanctions on Russia will stay in place. India is helping fill the gap left by the absence of Black Sea supplies, but should conflict/sanctions persist into the second half of 2022, no exporter can fully replace the Black Sea’s 30 percent of global trade. The market can’t yet confirm that Black Sea supplies remain absent from the market longer term, but this reflects the biggest risk to the world’s exportable supplies.
Additionally, Plains drought remains probable to expand into late May, which further tightens the U.S. balance sheet and implies that U.S. markets will continue to work to prevent non-traditional export demand.
Soybean futures remain largely range-bound through a narrow week of trade. May soybeans have largely been stuck between 16.50-17.25 dollars for the last three weeks, and that range is expected to continue into the end of the USDA reports.
March CBOT contracts expired on Monday, with March soybean going out at 16.87 dollars as against 13.96 dollars last year. Meal of oil contracts also finished at significantly higher values.
Weekly soybean export inspections look to be stabilizing, and soybean bids at the Gulf are still holding at record levels. Demand remains elevated as Chinese and other world buyers continue to realize far lower than expected Brazilian crops. New crop barge freight rates are also holding at record levels as exporters book freight for fall deliveries.
The National Oilseed Processors Association reported a February soybean crush rate of 165 million bushels, which was generally in line with expectations and just below the record crush that was set two years ago. AgResource estimates that the cumulative U.S. soybean crush rate is 6 million bushels over last year and is now record large.
AgResource looks for broad-ranging soybean markets ahead of USDA March reports, and stays bullish in the long term, with key support expected below 16.00 dollars for May contract. ■
CBOT agricultural futures in correction-Xinhua – Xinhua
