CHICAGO, Nov. 28 (Xinhua) — CBOT agricultural futures continued the upside trend in the past week as the U.S. dollar index closed below key support at 92.00 on Friday.
The immediate downside price target for the U.S. dollar index is the 2018 lows at 88.00 with a 2021 downside target of 80.00. Chicago-based research company AgResource predicted any modest corrections will be a chance for traders to secure breaks into yearend. World commodity values are forecast to peak in mid-2021, and being long of raw materials is a developing investment trend for 2021.
CBOT corn rallied to a new contract high this week. The pace of the rally has slowed as crop-critical weather in South America lies just ahead.
The 10-day South American forecast showed portions of Northern Argentina will see a decent boost in soil moisture, but some 35 percent of corn producing areas of Argentina and Southern Brazil will see abnormal heat and ongoing soil moisture loss. Any first-crop corn yield downgrade in Brazil will mandate additional supply rationing.
U.S. export demand continues to reflect the United States as the world’s cheapest feedgrain. Sales through the week ending Nov. 19 were a 3-week high 66 million bushels. Sales in next week’s report are expected in a range of 50-60 million bushels. An average of just 31 million bushels per week is needed to meet the U.S. Department of Agriculture (USDA) annual record large corn export forecast, AgResource noted.
Additional tightening of U.S. balance will push values higher. The rally will accelerate unless South America’s climate changes dramatically in the coming weeks. AgResource said a high is not expected until March/April.
U.S. wheat futures ended slightly higher amid ongoing support in global cash markets and confirmation that China has bought at least 200,000 metric tons of U.S. white wheat. China’s need for feed supply is robust, and AgResource maintained a bullish outlook for wheat amid tightening U.S. and world exportable corn supplies.
Meanwhile, U.S. winter wheat ratings fell last week due to acute Plains dryness. And crop health across Southern Russia is well below recent years. Sub-trend yields across the North Hemisphere will further tighten exporter stock/use ratio.
CBOT futures have once broken through a short-term downtrend line. But breaks are buying opportunities.
Soybean futures marked the 4th consecutive week higher and closed at the best levels since August 2014.
South American weather will be the driving fundamental force during December with rain desperately needed to stave off a drought.