Wed, 21 Oct 2020

Roundup: Weekly CBOT agricultural futures rally

Xinhua
20 Sep 2020, 05:05 GMT+10

CHICAGO, Sept. 19 (Xinhua) -- U.S. agricultural futures closed higher as the U.S. central bank indicated that U.S. interest rates will stay near zero percent for the next three years.

Chicago-based research company AgResource noted that soybean has become bullish in the past four weeks as Chinese demand and lower U.S. yield prospects under adverse weather combine to dramatically tighten U.S. soybean end stocks. China was forecast to import 28 million metric tons of U.S. soybeans, but that estimate appears low if China maintains its purchase pace of booking 1.5 million metric tons a week.

Corn futures rallied 10 cents, largely in sympathy with soaring wheat and soybean futures, though the rally was more subdued. The U.S. Department of Agriculture's (USDA) 2020-2021 export forecast leaves room for Chinese imports of 550-570 million bushels of U.S. corn or nearly 14 million metric tons, and commitments to China as of mid-September sit at 390 million bushels. China must remain an active buyer to prevent U.S. end stocks from rising to 2.7-2.8 billion bushels, AgResource noted. U.S. ethanol production and consumption remain weak as COVID-19 continues to harm global energy demand.

Unlike soybeans, there's limited uncertainty with respect to U.S. supply and demand of corn. Close attention will be paid to Argentina amid the arrival of La Nina, but seasonal rains are forecast to begin in South America in a timely fashion in late September.

U.S. wheat futures surged to new highs on concern over Black Sea dryness and the current pace of seeding. Severe drought has been in place across key areas of Southern Ukraine and Southern Russia for weeks. An arid pattern will continue into the opening days of October. Optimal winter wheat seeding dates in Russia span from mid-September to mid-October. Rain is needed and needed now, AgResource stressed.

The EU and Black Sea cash markets have led the recent rally as producers there have quickly become reluctant sellers.

Supplies in Australia will be large. There's ample incentive available to expand Northern Hemisphere seedings. The global cash market will stay firm unless regular rain develops across Eastern Europe, Ukraine and Russia.

Soybean futures rose to new highs, marking the highest weekly close since April 2018.

U.S. soybean export sales are record large on increased sales volume to China and unknown destinations. AgResource estimated that export inspections on Monday could reach 52-58 million bushels.

Chinese demand is the key going forward. It is estimated that on a known and unknown basis China has booked 23-24 million metric tons. The market is now awaiting yield data in late September to decide if the USDA is right in its estimate of 51.9 bushels per acre.

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