CHICAGO, April 2 (Xinhua) -- CBOT agricultural futures dropped in correction as U.S. Department of Agriculture (USDA) stocks and seeding data released this week were slightly bullish for corn and wheat and bearish for soybean.
Chicago-based research company AgResource looks for extreme trade to continue based on the uncertainty that surrounds the Russia-Ukraine conflict amid rising U.S. and world inflation.
Corn futures ended widely mixed this week with May contract down 19 U.S. cents and December contract up 19 cents. The July-December spread has fallen sharply since mid-March, which is logical given probable extreme U.S. corn supply tightness in 2022-2023.
The long-term outlook stays bullish and USDA stocks and seeding data confirmed that current U.S. and global supply issues will not be solved in the 2022-2023 crop year.
The goal of markets worldwide is to encourage substantial acreage growth in Argentina and Brazil from September through November, while the CBOT will try its best to shift acreage previously intended for soybean to corn. This will be a difficult task given uncertain fertilizer availability and as soybean profitability is positive.
A volatile corn market lies ahead as every 2-3 bushels an acre added or subtracted to the perception of U.S. yield will trigger weekly price moves of 0.25-0.50 U.S. dollars/bushel. AgResource suggests buying breaks, holding the support rests at 6.50 dollars.
Wheat futures ended the week sharply lower. AgResource holds that seasonal trends begin to turn negative in mid-spring, and even as the Russia-Ukraine conflict rages on, global trade erodes in spring/summer as importers begin to rely on domestic harvests, which will be ongoing across North Africa and the Mideast over the next 30-45 days. It is tough to be overly bullish of wheat between April and June unless world weather adversely impacts a key producer or exporter.
USDA data this week is viewed as bullish. U.S. 2022-2023 wheat end stocks are likely to fall to 525-550 million bushels amid a lack of spring wheat acreage expansion. U.S. end stocks will fall to near 400 million bushels if the Russia-Ukraine conflict is not resolved prior to mid-summer. While the conflict gets top priority with respect to price determination, concern over intensifying drought across the U.S. Plains is increasing.
AgResource holds that fair value for wheat lies between 10-12 dollars.
Soybean futures closed the week under acute pressure. USDA report was bearish and soybean futures extended losses into the close. USDA reported March 1 soybean stock at 1,931 million bushels, an increase of 370 million bushels from last year and the largest stock increase in the last three years. In the planting intentions surveys, farmers told USDA that they intend to plant 90.955 million acres of soybeans, a 3.8-million-acre increase over last year and 2.2 million acres higher than expectations. It was record large U.S. soybean seeding.
Yet, U.S. and global balance sheets remain exceptionally tight in both the old and new crop positions. World demand has remained relatively strong amid falling South American crop sizes. This keeps the long-term price outlook bullish with a normal U.S. growing season. Any type of weather problem will drive CBOT markets to all-time highs. AgResource holds initial support for July contract at 15.5 dollars, with November contract to find support at 13.90 dollars. This is no place to turn bearish, AgResource notes. ■
