CBOT agricultural futures rally on bullish stocks, seeding report
CBOT agricultural futures rallied strongly last week on bullish U.S. Department of Agriculture (USDA) stocks/seeding report.
Chicago-based research company AgResource stays bullish amid rising post pandemic demand and lasting drought in U.S. Northern Plain and Northwest Midwest.
CBOT corn futures ended sharply higher as USDA Stocks & Seedings data confirmed that perfect Plains/Midwest weather is needed in July/August to keep U.S. corn end stocks above 1,000 million bushels.
Tightening old crop stocks and record new crop demand require a yield of 180 bushels per acre to push 2021-2022 U.S. corn end stocks above 1.0 billion bushels. Such a yield is unlikely as drought/heat into pollination has pulled the top end of 2021 U.S. corn yields. And Brazil’s winter corn crop suffered a damaging hard freeze which looks to pull its total corn crop down to 84-87 million metric tons. Imports are needed and Brazil’s exports will be cut by at least 7-12 million metric tons.
AgResource expects new contract highs with key support below 5.50 dollars for December contract.
U.S. wheat futures ended higher. Spring wheat yield potential is in freefall amid ongoing abnormal warmth and near complete dryness across the Northern U.S. Plains and Southern Canada. The U.S. wheat market must add to both spring and winter acreage in 2022-2023 to prevent U.S. shortages in coming years. This is a new burden placed upon the U.S. wheat market which is bullish in longer term.
Nearby North American wheat will struggle as large crops are harvested in Europe/the Black Sea. However, like recent years, this new crop will be absorbed quickly by millers and livestock operations. Most important is that amid sizable North American spring wheat production losses, exporters will stock and use contracts again in 2021-2022. AgResource projects a range of 6.40-8.50 dollars spot CBOT into winter. Spring wheat futures must reach 9.00-9.50 dollars to compete with corn/soybean for acres across the U.S. Northern Plains next year. AgResource holds that breaks are opportunities to extend coverage into the first quarter of 2022.
Soybeans rallied to strong gains following bullish USDA Stocks/Seeding reports. USDA surprised the trade with a 2021 soybean planted area of 87.6 million acres, 1.4 million acres less than the average trade estimate. In the Grain Stocks Report, by June 1, soybean stocks were reported at 767 million bushels, 20 million bushels below expectations. The report sent soybean futures sharply higher on Wednesday.
Crop condition ratings for soybean are below the 5-year average. AgResource looks for U.S. soybean crop ratings to fall 1-3 percent amid last week’s acute flooding across Illinois and Missouri. And conditions in the Northern Plains will fall farther. The Weekly Drought Monitor showed that 33 percent of the U.S. soybean crop was in drought, with 100 percent of both Dakotas, 97 percent of Minnesota, and 75 percent of Iowa.
Until more is known about the late summer weather pattern, November soybeans will be well supported at 13.50-13.75 dollars. AgResource remains bullish on any early July rain related decline.