CHICAGO, Feb. 20 (Xinhua) — Chicago Board of Trade (CBOT) agricultural futures went higher in the week as the 2021 Outlook Forum painted a bullish trend for corn, wheat and soybean.
Chicago-based research company AgResource maintains a bullish view on commodities with soybeans to lead the next CBOT rally, saying any adverse world weather would send grain values into a more dynamic phase of the bull markets.
CBOT corn ended the week higher. U.S. Department of Agriculture (USDA) Outlook Forum 2021-2022 balance sheet confirmed that record U.S. yield is needed to rebuild U.S. corn end stocks. Even with a 180.5-bushel-per-acre (BPA) yield, any loosening of the U.S. balance sheet will be minimal as China is expected to import 25 to 40 million metric tons of world corn for years to come.
CBOT corn has reached 7.5-year price highs in recent weeks at 5.75 dollars per bushel. Near-perfect U.S. or world weather is needed for corn to turn bearish in July. A lingering La Nina is a concern. Chart-based support lies at 5.35 to 5.45 dollars. AgResource holds that after a lengthy rally, a period of consolidation lies ahead for corn, and adverse weather in South America will be the next likely bull catalyst.
U.S. wheat ended higher on the week. The rally was a function of historically cold temperatures amid limited snow cover across the states of Texas, Oklahoma, Kansas and Colorado as well as a growing lack of supply availability in Europe.
Like corn and soybean, there is little or no room for yield error in Northern Hemisphere exporting countries. Even trend yields will allow exporter stocks to build only modestly amid record global consumption and trade.
AgResource holds that the biggest issue plaguing the world wheat cash market is the uncertainty surrounding Russia’s new crop export tax scheme. U.S. export demand will suffer in summer/autumn if Russian exports normalize. World cash markets may surge to new highs if Russia cannot participate in world trade in July-August. Adding to the bullish uncertainty is a drought in the U.S. Plains that is forecast to expand over the next 90 days. Chart-based support sits at 6.35 to 6.40 dollars.
Soybeans closed the week moderately higher. Trading interest was limited in the U.S. holiday-shortened week while China and South America traders were on holiday.
The USDA’s 97th Outlook Forum produced the most bullish new crop U.S. soybean balance sheet ever offered. U.S. soybean acres were estimated at 90 million acres with a 50.8 BPA yield producing a record large harvest of 4,550 million bushels, with U.S. seeded acres and yield both fractionally under prior record highs.
Nevertheless, even with record large U.S. soybean production, U.S. 2021-2022 soybean stocks were just 145 million bushels, with a record low stock/use ratio of 3 percent.
Still higher price/profit incentives are needed to encourage farmers to reach the USDA’s record production estimate for soybean, AgResource holds. Soybeans have regained the bullish price leadership role at the CBOT.