CHICAGO, Feb. 11 (Xinhua) -- CBOT agricultural futures rose in the past week on growing concerns about a deepening Argentine drought.
Chicago-based research company AgResource argued that there are no clear bullish or bearish commodity trends and that traders should be willing to sell strong rallies and buy strong breaks.
Corn futures closed firm for a second week as drought continued across Argentina amid the uncertainty over the pace of Ukrainian exports. The market needs to know the actual size of Argentine crop and must confirm the extension of the Black Sea export corridor in mid-March before a downward trend can be sustained.
The long-term outlook is bearish as El Nino is forecast to arrive a bit sooner than previously expected, which bodes favorably for summer global weather patterns.
The market since early January has been unable to break through what has become strong chart-based resistance at 6.90-7.00 U.S. dollars. Unlike a year ago, fear over global shortage is lacking despite Argentine drought.
Wheat futures in the United States and Europe ended sharply higher as sizable fund short positions collided with growing concern over Black Sea logistics and grain flows. There is a consensus that military action in Ukraine will escalate, and importers are already beginning to purchase wheat for delivery beyond the time when the current export corridor agreement must be renewed, adjusted or eliminated. Geopolitics and the real uncertainty over Russian and Ukrainian grain exports will stay intact nearby.
The wheat market has broken through chart-based resistance. Additional speculative short covering is possible in February, particularly if corn prices stay elevated amid ongoing Argentine drought.
AgResource held that rallies should be rewarded. Improved weather in North Africa and the Middle East is noteworthy. Actual fear of supply shortages hinges on conflict in Ukraine.
Early-week selling in the soybean market found support against a longer-term uptrend line, while a late-week rally due to ongoing Argentina dryness lifted March soybeans to the best close since June.
The February World Agricultural Supply and Demand Estimate report did not offer any major changes, with U.S. Department of Agriculture (USDA) lowering its estimate for the U.S. soybean crush and raising its ending stock forecast.
The USDA lowered the estimate for Argentine soybean production. However, total South American production is still forecast to be at record level of over 200 million metric tons.
Harvest progress in the state of Mato Grosso, Brazil was reported at 44 percent complete and right at the five-year average. The soybean price outlook will hinge on Argentine weather for the next three to four weeks. The soybean market is trying to decide whether future Brazilian crop gains from record harvested yields will offset Argentine losses due to the ongoing drought. ■