CBOT agricultural futures rise on supply tight

CHICAGO, May 14 (Xinhua) — CBOT agricultural futures rose slightly over the past week as India banned wheat exports.

As the conflict between Russia and Ukraine continues with no end in sight, Chicago-based research firm AgResource remains optimistic about grain, saying modest pauses will open up new buying opportunities.

Corn futures ended the week with a combination of new crops on the old ones as long-term bullish ideas increasingly focus on the 2022-2023 crop. The wheat market has shown a lack of tolerance for supply dislocation. Corn will follow wheat to new rally highs if the weather in Central America is anything but ideal.

The spot market has consolidated at near record prices amid a recent slowdown in export sales and weaker-than-expected weekly ethanol production. However, the downside risk in old and new harvest contracts is limited.

The need to ration global wheat stocks is beneficial for global corn feed consumption in 2022-2023. AgResource remains optimistic about forecasting new highs when the weather in Central America turns unfavorable.

Wheat futures worldwide broke out as Europe was added to the list of production problems amid developing drought. And India has banned exports except to a few countries that are under pressure on food security. The climate in North America shows no sign of improvement with spring wheat sowing through late May and June and the rapid intensification of drought is returning to the southern and western plains of the US. Amid the conflict in Ukraine, there are significant supply disruptions. AgResource suggests that a rally in supply rationing will eventually be needed in the fall/winter unless peace is reached in Ukraine in the near future.

There is some uncertainty about the pace of Russian exports from July, when the current quota system ends. But there is no doubt that balance sheets in the United States, Europe, Canada, Australia and Argentina will be historically tight.

AgResource maintains that the fair value in the second half of 2022 will be between USD 12 and USD 14 for US wheat futures. Fully replenishing US and exporter balance sheets will take at least two harvest years.

Soybean futures ended the week with solid gains. July soybeans ended the week 24.5 cents higher.

The National Oilseed Processors Association (NOPA) will release April’s crush data on Monday. Historic soybean prices have not slowed domestic crushing or exports. There is a need for rationing with a record number of outstanding sales of old crops and a record number of sales of new crops. US soybean exports will be historic for the next nine months.

AgResource maintains optimistic outlook, with prices of old and new crops soaring to new heights as the need to ration supply remains acute. There is no tolerance for a drop in yield.

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