CBOT agricultural futures trade flat in past week
Chicago Board of Trade (CBOT) agricultural futures traded flat in the past week as the energy market accelerated on tightening supplies.
Chicago-based research company AgResource holds that it will be key to watching grain price action following the October Crop Report for agricultural price direction.
December corn ended slightly weaker amid speculative profit taking and the ongoing harvest. U.S. and world balance sheet changes in U.S. Department of Agriculture (USDA) October World Agricultural Supply and Demand Estimate (WASDE) report will hinge almost exclusively on yield adjustments.
Fund managers and end users are also awaiting USDA’s October yield before making longer-term purchasing plans. AgResource suggests spot CBOT corn has found a new higher price plateau with strong support sitting at 5.10 U.S. dollars to 5.25 dollars. EU corn prices have rallied to 7.35 dollars per bushels amid the rising need for imports. Brazilian corn remains perched above 7 dollars per bushel.
The premium of gasoline to ethanol was at 0.16 dollar per gallon, which raises the need to boost corn grind. Price risk leans heavily to the upside.
U.S. wheat futures ended mixed, with KC contracts ending weaker and spring wheat contracts in Minneapolis finding new contract highs. Winter wheat contracts touched overbought technical levels and a modest correction ensued.
Wheat outlook remains bullish, particularly on breaks. Weekly and monthly price charts continue to show that market weakness only encourages end users and import buying. AgResource maintains that U.S. exports will jump beginning in early 2022 as milling wheat supplies in Europe become exhausted and Russian government aims to control grain shipments more strictly by late winter.
Wheat will follow corn in the near term as North Hemisphere corn yields will be adjusted on Tuesday. In longer term, wheat prices will relax once record North Hemisphere production can be confirmed next June. The market cannot afford any additional exporter production loss in 2022.
Soybean futures held a narrow range around unchanged through the week. Overall technical weakness following the September Grain Stocks report limited rallies while building export demand and firming Midwest basis bids offered support. AgResource expects that the national soybean harvest will have reached or exceeded 50 percent by Sunday.
Soybean crush margins continue to soar on strong meal basis and record-higher soybean oil basis. Domestic demand will be robust in the year ahead. China returned from a weeklong holiday this week.
USDA will soon release the October Crop Report. Ahead of the report, the trade is positioned for a larger national soybean yield. The first technical target for spot futures is at 13.94 dollars.