CBOT agricultural futures close mixed

CBOT agricultural futures closed mixed in the week as a new COVID-19 variant could cause new global economic slowing, Chicago-based research company AgResource noted.

AgResource stays longer term bullish of commodities on strong world demand and tightening supplies. But given the fact that the new COVID-19 variant could produce liquidation heading into the end of the year, AgResource holds this is not the time to chase a rally.

Corn futures ended slightly lower amid early-week fund liquidation. Concern over the Omicron variant and a possible Federal Reserve rate hike in 2022 were cited. The market is beginning to pay closer attention to drought expansion in Southern Brazil and the pattern of lengthy Argentine dryness.

South American weather will be priority concern between mid-December and late February.

Technically, the market remains bound to a range of 5.65-5.90 dollars for March corn. However, upside rises to 6.25-6.50 dollars if South American climate outlook is proven correct. The loss of just 5 percent of the South American production will pull exporter stocks/use to a new record low despite larger Ukrainian production.

AgResource suggests end user buying on 8-10 cent breaks, saying a much more bullish outlook will unfold in early 2022 if South American weather stays too dry.

Wheat futures ended the week sharply lower. Concern over Omicron’s impact was the initial catalyst for fund liquidation and fundamentally, the boost in Australian and Canadian production by a combined 3.6 million tons acted as a weight. AgResource holds that incredible volatility will be the dominant feature of the marketplace once Northern Hemisphere winter crops exit dormancy. There will be little to no tolerance for any yield loss.

Longer term uptrend lines have held and will continue to hold into late winter. Russian exports will be no larger than 32 million metric tons as the Russian government implements an export quota beginning in mid-February. EU wheat exports continue at an unsustainable pace and must be slowed via higher prices. AgResource maintains that the U.S. share of world trade will jump next spring, with drought expansion in the Plains lingering in the background. It holds that wheat below 8.00 dollars is a buy opportunity, and new highs may occur in early 2022 on tightening world exporter supplies.

Soybean futures ended higher in the week with January contract up 14 cents and breaking through the 20-day moving average. There is a scenario in which U.S. yield may be lowered in January and production in Argentina and Brazil will be trimmed by a combined 6-12 million metric tons due to the coming adverse La Nina dryness.

AgResource notes that abnormal dryness in Southern Brazil has also reached into major crop areas of Parana and Mato Grosso do Sul. A record 144 million metric tons of Brazilian soybean crop is not guaranteed.

XINHUANET.com

Tags: AgResource, soybean futures, corn futures, CBOT, agricultural futures, demand, wheat futures, supplies