Roundup: Weekly CBOT agricultural futures recover amid bearish trends

By Xu Jing
  • World
  • Sunday, 16 Aug 2020

CHICAGO, Aug. 15 (Xinhua) -- Chicago Board of Trade (CBOT) agricultural futures recovered in the week as storm damaged certain acreage of crops in U.S. Midwest. But as rallies will hinge heavily on trade and demand, Chicago-based consulting company AgResource predict that longer-term bearish trends will continue into mid-October.

CBOT corn recovered from contract lows on new supply uncertainty. The U.S. Department of Agriculture's (USDA) report leaned bearish as the National Agricultural Statistics Service (NASS) pegged yield at record 181.7 bushels per acre (BPA), with stocks being 2.8 billion bushels.

However, following widespread storm damage in Iowa, Illinois and Indiana the traders are less certain that yield will rise further in September. The extent of damage won't be known until harvest, AgResource noted.

But the big-picture themes of oversupply and the need to boost global consumption are unchanged. Ethanol production in the first week of August was down 12 percent from the same week in 2019. Non-U.S. corn production will be record large in 2020-2021. 2020 U.S. corn end stocks are still pegged to reach or exceed 3 billion bushels. This mandates that a lasting period of weak prices are needed to encourage expansion in demand well into early 2021, AgResource said.

U.S. wheat futures ended higher on strength in corn and amid a strong rally in European wheat futures on Friday. Other input remains bearish as exporter production estimate rise. Like corn, the goal of the wheat market moving forward is to sustain growth in world trade, AgResource noted.

Final Russian wheat production is likely to reach 81-82 million metric tons, up 7-8 million metric tons from last year. Combined production in Canada and Australia is expected to exceed last year by 15-16 million metric tons, which may completely offset the production loss in Europe. Favorable rainfall in Australia and rising yields in Russia have eliminated any bullish trend in wheat.

Soybean futures first found support on short-covering in early week, and then found support in widespread storms and reported crop damage, as well as on Farm Service Agency's (FSA) August certified acre update. NASS put forward a larger than expected soybean yield of 53.3 BPA. But FSA's certified acreage suggested that soybean acres could be down from NASS's June estimate. AgResource doubts that final soybean acres can fall much more than 500-700,000 acres.

Meanwhile, soybean export sales continue to rise as China has remained a regular buyer of U.S. soybeans. U.S. first-quarter exports of soybean are likely to be record large, and the basis for exports remains historically strong. Only the record-large U.S. yield may slow the rallies ahead of harvest, AgResources noted.

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