CHICAGO, Nov. 19 (Xinhua) -- Chicago Board of Trade (CBOT) agricultural futures went lower in the past week on lukewarm demand.
Peak inflation has been found but pushing inflation below 2 percent in 2023 will be arduous. The U.S. and world economy are contracting, and the Federal Reserve's mentality of higher for longer will not aid a lasting recovery of demand. The outlook for CBOT agricultural futures goes lower on slowing U.S. and world economic growth rates.
Corn ended firm but was unable to break through what is now strong chart-based resistance at 6.75 to 6.85 U.S. dollars for March contract. The market's positive reaction to this week's renewal of the Black Sea export corridor is noteworthy.
Ultimately, Ukraine's access to maritime exports into mid-March will boost 2022-2023 exports there to 21-23 million metric tons, as against 15.5 million metric tons projected by the U.S. Department of Agriculture (USDA). The U.S. market will struggle to find additional world feedgrain market share. This in turn allows stocks to build in 2022-2023.
Number one priority after Thanksgiving holiday is weather and soil moisture in Argentina and Southern Brazil. Threats are absent in Brazil, but additional rain is needed across Argentina prior to mid-December, when second crop corn seeding resumes. South American yield performance is critical.
U.S. wheat futures ended steady to lower with new fund selling occurring in Chicago following the renewal of the Black Sea export corridor. The corridor will allow Ukraine to ship some 13-14 million metric tons of wheat in 2022-2023, compared to USDA's forecast of 11 million metric tons. Russian exporters remain aggressive, and pace analysis shows Russia may ship more than 42 million metric tons this year. Elevated competition for winter export demand will challenge lasting rallies in the United State and Europe.
AgResource suggests that 8.00 dollars for CBOT wheat account for enlarged Black Sea exports. Exporter stocks/use will be the second lowest on record, and boosting exporter supplies requires favorable North Hemisphere weather next spring or early summer. Fair value for wheat lies between 8.00-8.50 dollars. Rallies should be sold. Wheat holds in a broad range.
CBOT soybean futures ended lower amid collapsing crude oil markets, which negatively impacts renewable diesel potential, and as non-threatening weather remains in place across Brazil. A short-term uptrend line is intact, but a close below 14.10 dollars for January contract may accelerate the long liquidation.
Choppiness is not probable this week, but without clear threats to Brazilian yield potential by early December, a more bearish pattern will unfold. The U.S. window to maximize exports closes in just 30-45 days. Brazilian soybeans for February delivery are already offered 0.85 dollars below U.S. Gulf origin, and Brazil's discounts will widen without a rapid onset of improvement in the flows of the Mississippi River.
Export competition ahead leans bearish for U.S. exporters into the new crop growing season. CBOT soybeans have resistance above 14.50-14.75 dollars. ■