CHICAGO, April 15 (Xinhua) -- CBOT agricultural futures advanced in the past week as U.S. and world central banks neared the end of the rate hiking cycle, Chicago-based research company AgResource noted in a weekly roundup on Saturday.
The problem central banks worldwide face is that grain supplies are declining. The lack of supply against a resurging Chinese economy underpins grain values. AgResource stays bullish on agricultural futures into the third quarter of 2023.
CBOT corn futures ended higher with the May contract scoring an eight-week-high settlement amid soaring interior basis bids, pessimism over the future of Ukrainian corn exports and the return of snow and freezing temperatures to the Northern U.S.
Bullish March 1 stocks data raised the burden on U.S. weather considerably. Global stocks can only build if U.S. yields are at or above the trend. The near-term outlook is bullish.
Risk premium will be added without U.S. weather improvement. Corn's bull cycle may extend into the first quarter of 2024 if Mother Nature fails to cooperate in the Northern Hemisphere.
U.S. wheat futures ended steady to higher. The odds are low that the Black Sea export corridor will be extended in mid-May, and the short covering is likely to be a theme into late spring if the weather in U.S. Central Plain fails to improve.
Combined wheat supply in Russia and Europe will be sizable this summer, but falling production estimates in the United States and North Africa assure another contraction in global stocks in 2023-2024.
U.S. wheat ending stocks may drop to 525-550 million bushels if the drought in U.S. Plains fails to end and if lasting warmth is unable to develop across the Northern Plains by May. Without climate improvement, the U.S. market will be forced to slow exports further via price. The initial upside price for CBOT wheat is pegged at 7.25-7.40 dollars.
Soybean futures made modest gains and held above 15 dollars. Market news during the week was limited despite the release of the April World Agricultural Supply and Demand Estimate report. The report lowered the Argentine soybean production estimate by 5 million metric tons to 27 million metric tons. However, private estimates are another 2-4 million metric tons lower at 23-25 million metric tons.
U.S. processing margins are well under earlier year highs but are still historically strong as U.S. soybean stocks tighten. Cash market strength should support July soybeans on breaks below 14.50 dollars while November soybeans are too cheap below 13 dollars. ■