Roundup: Chicago Board of Trade agricultural futures rise

By Xu Jing
  • World
  • Sunday, 09 Oct 2022

CHICAGO, Oct. 8 (Xinhua) -- Chicago Board of Trade (CBOT) agricultural futures were higher in the past week amid soaring energy values following OPEC+ deciding to cut its oil production by 2 million barrels a day starting from November, Chicago-based research company AgResource said.

Strong U.S. September jobs data showed that the U.S. central bank is a long way from its goal of pushing inflation back to its 2-percent target, and the odds are high that the Federal Reserve will keep raising interest rates in November and December. Confidence in whether the U.S. central bank can orchestrate a "soft landing" is in decline.

CBOT corn ended slightly higher on the week. The market is stuck between supply risks, which include yield hints that U.S. corn production is trimmed by another 30 to 50 million bushels by the U.S. Department of Agriculture (USDA) and a lingering drought in Argentina. U.S. ethanol margins improved dramatically amid the sharp rally in crude oil, but U.S. corn export demand stays slow amid the U.S.'s non-competitive position.

AgResource's thesis is centered on the likelihood that supply loss moving forward will more than be offset by demand destruction. The 2022 U.S. corn crop will be largely known on Wednesday. Thereafter, it's all about U.S. export demand and weather in South America.

World wheat futures ended lower, with contracts in the United States and Europe unable to exceed the previous week's high.

The outlook into late autumn is unchanged. Record low stocks/use in non-Black Sea exporting countries and ongoing droughts in Argentina and the U.S. Plains provide structured support at 8.70 U.S. dollars for CBOT December wheat and 9.65 dollars for Kansas December wheat.

Soybean futures were on both sides of unchanged throughout the week and firm at Friday's close. CBOT trade was a mix of domestic logistical issues and heightened volatility in U.S. energy and financial markets.

The soybean export pace was slowed by low Mississippi River levels and barge draft restrictions. This has sent grain transportation costs soaring to historic highs, which is driving interior nearby basis bids sharply lower. The freight problems compound the seasonal supply issues, but logistical conditions are expected to improve in the coming weeks.

The USDA reported last week that 22 percent of the U.S. soybean harvest had been completed. Weather across the Midwest was extremely favorable for harvest. AgResource expects that the national harvest progress will have advanced to 35 to 40 percent complete by Sunday.

The initial estimate of CONAB, Brazilian national supply company, about Brazil's soybean crop was a record high 152.4 million metric tons as yields recover and areas expand. This will slow CBOT soybean rallies in the coming months.

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