Chicago (US), November 6: Chicago Board of Trade (CBOT) agricultural futures stayed firm at a high level in the past week amid market volatility as traders sought new market drivers, Chicago-based research company AgResource said in a report.
In view of the Federal Reserve's interest rate hike by 0.75 percent on Wednesday and more hikes due in December, the company said confidence in whether the U.S. central bank can orchestrate a "soft landing" is declining, therefore rallies in U.S. agricultural markets are unlikely to be sustained until the first quarter of 2023.
CBOT corn futures ended flat as the market found equilibrium at 6.80 U.S. dollars for December contracts. Ukrainian grain exports have resumed, with Free on Board (FOB) basis 2.50 dollars per bushel below U.S. Gulf origin.
South American basis has not rallied, leaving U.S. corn as the world's most expensive feed grain by sizable margins, said the company.
Ultimately, the loss of world market share will prove bearish as the fear of shortages diminishes and deliverable supplies build, it said, adding that a neutral trend is forecast into December.
World wheat futures ended firm. Since late summer, CBOT wheat has been bound to 8.30-9.50 dollars and this range is expected to continue into mid/late winter.
The end of La Nina weather and possible development of El Nino events bode favorably for North Hemisphere precipitation this winter and spring. However, given the historic drought across the plains, volatility will continue, it said.
Soybean futures marked strong weekly gains of nearly 64 cents and the best weekly close in seven weeks, the company said, noting that the support came from strong domestic crush margins and rising crude oil prices.
U.S. soybean harvest is winding down and has been completed in many regions. AgResource expects that 95 percent of the U.S. soybean crop will have been harvested by Sunday.
Driven by historic processing margins in all regions, soybean basis remains firm across the Midwest, said AgResource, adding that soybean prices are rising across the Northern Plains and upper Midwest markets, while basis at Gulf delivery markets remains firm as barge freight declines.
Soybean export inspections are seasonally strong, but the cumulative pace is behind a year ago. AgResource said that if the pace follows a normal seasonal trend, the annual exports could fall to 1,950 million bushels due to a slow start, which should top January soybean at 14.75-15.00 dollars.
Source: Xinhua
