CHICAGO, Dec. 30 (Xinhua) -- CBOT agricultural futures closed higher for this week as global energy market rally paused, Chicago-based research company AgResource noted Friday.
Agricultural market price discovery next week will exclusively hinge upon weather in Argentina and southern Brazil. Ultimately, the arrival of record Brazilian corn and soybean crops, and probably favorable U.S. Midwest weather in this spring and summer, will prove bearish in the long run. AgResource maintains a strategy of using strength in the first quarter to add to sales.
CBOT corn futures ended higher for a third week, with March contract breaking through all major moving averages amid lingering concern over Argentine output. The crop there is now 62 percent planted. The need for rain is immediate, and price determination in the opening weeks of 2023 will hinge almost entirely on 10-day weather forecast for South America.
The major exporter balance sheet will tighten significantly if final Argentine corn production drops below 45 million metric tons, compared to 55 million currently projected by the U.S. Department of Agriculture. However, with absent global demand growth and abundant U.S. ethanol stocks, supply-driven rallies are always opportunities to add to cash sales.
Wheat futures ended steady to higher this week amid strength in row crop markets, supportive chart patterns, the U.S. dollar index dropping to a newer 6-month low weekly settlement, and Southern Hemisphere harvest pressure coming to an end.
Unlike corn and soybeans, global physical supplies of wheat have peaked and will progressively dwindle into summer. It is tough to be bearish of CBOT wheat below 7.60-7.70 dollars, and AgResource noted that seasonal price trends worldwide are positive through the winter months.
Yet the market will struggle above 8.00 dollars, as there is still no indication of Black Sea export disruption. Abnormal warmth in Ukraine and southern Russia will sustain active loadings. There is also clearly a willingness on behalf of global governments to allow Black Sea supplies to find importer markets. U.S. and EU export demand will struggle, and there is just no meaningful concern over outright shortages in 2023.
Soybean futures marked a week of strong gains. Soybean trade was supported by limited Argentine rains and a worsening weather forecast at the end of the week. However, crops in central and northern Brazil are in excellent condition and increases in Brazil and other South American countries look to offset any Argentine losses.
AgResource doubted that a lasting old crop rally can develop with a record large Brazilian crop. The focus will be on new crop sales. ■
