CHICAGO, June 19 (Xinhua) -- CBOT agricultural futures closed lower on liquidation in the past week, which, Chicago-based research company AgResource holds, is just an interlude amid rising post-pandemic demand.
AgResource stays bullish as weather will have an important say in the coming months.
CBOT corn ended lower amid massive fund liquidation and improved rain chances across the Eastern Midwest. Spot CBOT corn's weekly chart shows the demand-driven rally established in late 2020 shows the rapid acceleration in volatility as the 2021 U.S. growing season began. Volatility seen in recent weeks will be a feature of the marketplace until Northern Hemisphere crop size is known in September. 2021 yields are critical in measuring the need to ration supply longer term.
Otherwise, spot CBOT has held support at a major uptrend and at current prices downside is extremely limited. Heat and dryness will persist indefinitely across the Plains and far Western Midwest. Odds are high that this hot/dry pattern will inch into the Central Midwest in July. Amid export and industrial demand growth, yield loss of just 5 percent relative to trend will trigger real concern over available supply in 2021-2022. Black Sea crops will be stressed in the next two weeks amid searing heat and a complete lack of precipitation. December contract may reach new highs unless a pattern of widespread and regular soaking rain is established in July. The market risk is to the upside.
U.S. wheat futures ended lower amid pronounced weakness in neighboring corn and soybean markets. The Northern Hemisphere harvest is ongoing and typically June is the wrong month to be bullish of wheat.
Yet, the market has been unwilling to shed premium since mid-2020 amid tightening exporter stocks/use. Additionally, the U.S. Department of Agriculture's (USDA) 2021-2022 global production forecast is viewed as 7-10 million tons too high amid disappointing yields across the Middle East and ongoing threats to spring wheat production. There is little hope for U.S. spring wheat yield stabilization as heat and dryness return to the Northern Plains and continues across the Pacific Northwest. And a new threat has emerged in the form of dryness and abnormal heat across Central Russia and Kazakhstan.
Rising importer demand and lower exporter production will further tighten the exporter balance sheet. Acreage expansion is needed.
Soybeans fell to deep losses through the week on massive liquidation in July futures. Forecast Midwest rainfall and broad-based commodity fund liquidation sent the market to record losses on Thursday. However, soybeans recovered some of their losses on Friday.
U.S. new crop export sales are at a seven-year high.
Based on the tight old crop carryout, there will be no room in the U.S. balance sheet for a sub 50-bushel-per-acre (BPA) national average soybean yield.
AgResource stays bullish on the break, with 12.50 dollars for November contract seen as key chart support. New contract highs are likely if much better rains do not soon fall across the Western Midwest. The demand profile for U.S. soybeans is bright as Brazil rapidly exports its record harvest. World soy demand will be shifting to the United States from late September onward. Enditem