CHICAGO, Jan. 8 (Xinhua) -- Chicago Board of Trade (CBOT) agricultural futures closed mixed ahead of the January U.S. Department of Agriculture (USDA) Crop Report due out on Wednesday.
Chicago-based research company AgResource holds that a new weekly high close would argue for an acceleration of the CBOT bull market.
Corn futures recovered on the week as bullish momentum returns due to threatening South American weather. Most importantly, AgResource's research suggests that South American corn production loss of 10 to 12 million metric tons has already occurred, with additional losses over the next 10 days.
South American crop loss has already crossed the threshold of pulling exporter stock/use down to a new record low of 6.8 percent to 7.0 percent, as against 7.3 percent in 2020-2021. This is bullish longer term. The need for physical corn supplies in the United States and Black Sea will surge February onward. There is no sign of slowing U.S. ethanol production. And world trade is now above last year as of early January.
The corn outlook depends on North Hemisphere production potential. The January USDA Crop Report and upcoming South American weather will determine price direction next week. AgResource's view is that support below 5.75 dollars for March corn should hold a correction.
Global wheat futures ended sharply lower for a second consecutive week amid meager U.S. export demand and as Argentina's crop is raised further. Record South Hemisphere production has been the catalyst for the recent break, but AgResource suggests the market is finding demand at current prices.
Despite weakness in world futures markets, Russia's cash market is rising amid firm interior prices and as Russia's export tax inches closer to 100 dollars per metric ton. Additionally, Russia will cap Feb. 15 to June 30 exports at 8 million metric tons, and based on trade through early January, annual Russian exports will be no larger than 32 million metric tons, as against USDA's 36-million-metric-ton forecast.
Longer term, record yields are needed in every North Hemisphere exporting country to build exporter stocks in 2022-2023. The market since late 2020 has been marked by sizable breaks, followed by new highs. The long-term outlooks stays bullish.
Soybean futures ended the week above 14.00 dollars per bushel, the best price since July. South American crop estimates are in fast retreat following six to eight weeks of heat/dryness across Southern Brazil and Argentina. AgResource has lowered estimate of Brazilian soybean production to 131 million metric tons, as against USDA's December projection of 144 million metric tons. Argentine crops are also quickly rolling backwards with AgResource forecasting the crop at 46.5 million metric tons, down 3 million metric tons.
Including a 2.5-million-metric-ton loss in Paraguay, South American crop losses are approaching 18.5 million metric tons. Such losses substantially change the outlook for 2022-2023 U.S. exports, seeding needs and price. South American crop losses will be shifted to the United States in an old and new crop position. The trade looks forward to the USDA's Crop Report. Any further loss of South American soybean production will accelerate the upside bull momentum. ■