CHICAGO, April 1 (Xinhua) -- Chicago Board of Trade (CBOT) agricultural futures closed the past week higher on bullish U.S. Department of Agriculture (USDA) stocks and seeding data, Chicago-based research company AgResource noted in a weekly roundup on Saturday.
The problem central bankers face is that the supplies of grain are not rising, according to the roundup. The lack of supply against a resurging Chinese economy will underpin raw material values. AgResource is returning to a more bullish CBOT outlook.
CBOT corn futures extended recovery following bullish USDA stocks data. There is just no way global stocks will be building in crop year 2022-2023, and stocks building in 2023-2024 hinges almost exclusively upon Central U.S. weather this summer, the roundup noted, adding that the upside risk is present between now and June.
Like recent years, there is no tolerance for U.S. supply dislocation, and concerns over drought in the Southern Plains and abnormally heavy snow cover in the Upper Midwest are increasing. Water availability issues will be avoided in the principal Midwest, but seeding dates will be the market's primary concern from late April onward.
U.S. wheat futures ended steady to higher. USDA confirmed that U.S. spring wheat acreage would be down slightly year on year. Additional snowfall next week across South Dakota, North Dakota and Minnesota already pushes seeding into May. Zero rain is forecast across the hard red winter wheat belt into April 10.
AgResource maintains that the global wheat market will be incredibly complex in 2023. Western companies' leaving Russia this week is a big deal. The Russian market will be less reliable in 2023-2024, and in the long run there is a threat to productivity gains there if farmer incentives are stripped. European Union supplies stay abundant with normal weather. U.S. stocks contract for another year, and it is possible that Australian production will be trimmed by 10-15 million metric tons year on year if El Nino's strength matches current forecasts in August-September.
There is no room in U.S. balance sheets for a shortfall due to weather, the roundup noted.
Soybean futures recovered from deeply oversold conditions and extended weekly gains following the release of the USDA's March Grain Stocks and Prospective Plantings reports. May futures ended the month back above 15 U.S. dollars, while November contract was above 13 dollars. USDA reported soybean stocks at 1,685 million bushels, down 13 percent from last year and 82 million bushels less than the average trade estimate. In the soybean acreage estimates, USDA reported planting intentions of 87.5 million acres, 55,000 acres less than a year ago.
Technically, a recovery is underway, and a much stronger rally is needed to encourage U.S. farmers to switch corn acres to soybeans. New contract highs are likely.
AgResource projects that U.S. old crop stocks will fall to 180 million bushels, while trend or higher new crop yields are needed to keep 2023-2024 soybean stocks above 200 million bushels. The soybean market cannot afford to lose an acre of production or a bushel of yield, which will boost market volatility. ■