Tue, 07 Feb 2023

Roundup: CBOT agricultural futures go lower

Xinhua
04 Dec 2022, 13:44 GMT+10

CHICAGO, Dec. 3 (Xinhua) -- CBOT agricultural futures ended the past week lower on slowing demand, Chicago-based research company AgResource said Saturday.

AgResource fears that the battle against inflation will be difficult and long, believing the bearish price trends will hold on slowing U.S. and world economic growth.

CBOT Corn ended sharply lower. Export demand has slowed following the recent surge in Mexican interest. Ethanol demand is unexciting. It is left to adverse Argentine weather to support the market, but there are still a few weeks before weather there begins to directly impact yield.

Corn's chart pattern has turned bearish as prices plunged below the November lows. Support during October-November at 5.70-5.80 dollars for March contract is now transitioning to resistance. AgResource cautions against turning bearish below 6.35 dollars amid uncertain Argentine weather and a rising Brazilian market.

CBOT wheat fell to a new three-month low as Russia continues its dominance of world wheat trade. U.S. and European exporters will struggle to find incremental market shares, and the fear of regional shortages has been eliminated by the extension of the Black Sea corridor.

However, wheat values are viewed as undervalued now. Exporter stocks/use will be the second lowest on record in 2022/2023 and is likely to contract further in 2023-2024 amid reduced seeding in the Black Sea. Sales are not advised at current prices. World importers like Pakistan, Saudi Arabia and Egypt will see current world wheat prices as a bargain.

CBOT soybeans ended steady. There is hope that the United States will sustain its monopoly on global trade for another 30 days. A short-term uptrend line has held, but it is critical that new fund buying emerges on breaks of January contract to 14.10-14.20 dollars.

The lack of mandated biofuel growth in 2023 is a big deal. U.S. domestic soyoil demand will likely drop 400-500 million pounds as a result.

Weather in Brazil will be nearly ideal into the middle part of December, and the combination of reduced exports and weakening crush margins will allow stocks to build. The outlook for soybeans stays bearish.

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