Markets > Commodities

Chicago agricultural commodities end higher weekly on more exports

Xinhua Financein ​CHICAGO
2018-09-23 20:18

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Chicago Board of Trade (CBOT) agricultural commodities closed higher over the trading week ending Sept. 21, as higher-than-expected weekly export sales and prospects for U.S. harvest delays sparked a round of short-covering.

The most active corn contract for December delivery rose 5.5 cents weekly, or 1.56 percent, to 3.5725 dollars per bushel. December wheat delivery went up 10.25 cents, or 2 percent, to 5.2175 dollars per bushel. November soybeans added 16.75 cents, or 2.02 percent, to 8.4725 dollars.

The U.S. and world corn markets have digested last week's bearish U.S. Department of Agriculture (USDA) report, and have begun a demand-driven recovery.

U.S. corn export sales are strong with sales 50 percent above last year. Argentine FOB (free on board) basis has rallied sharply as supplies dwindle and a 30 percent grain export tax is considered.

Elevated interior freight rates hinder Brazilian corn shipments. December futures is nearly unchanged from a year ago, while the funds' net short position reaches over 141,00 contracts.

EU feed operators continue to struggle for supply, while an outright culling of herds will be demanded in Australia. It's very important that USDA's U.S. corn yield is validated by harvest data.

The U.S. and world wheat futures rallied and have broken through a downtrend line that's been in place since early August on the daily charts. World cash markets are rising again, as evidenced by this week's Egyptian tender.

Most importantly, major exporter supplies continue to fall amid recent frost and freeze in Australia, and as little to no rain is offered to the Aussie wheat belt into October.

There are still massive tonnages of demand that needs to be filled and North America is in a supply position to capture the demand. Analysts maintain a bullish outlook and they are becoming confident in a coming boost in U.S. export demand.

Longer term, a close eye needs to be kept on deepening drought in Europe and parts of the Black Sea.

Soybean futures slipped to new contract lows in the first half of the week and rallied in the last half. November soybeans marked the first higher weekly close in since mid-August, and the best weekly close in four weeks.

Rallies were driven by rumors of export sales to Argentina, along with strength in the corn market. Midwest cash markets remain historically weak, and farmers remain very slow sellers at current prices.

The Commitment of Traders report showed that hedgers held a rare net long soybean position-the first since January. Spot soybeans have held in a broad range of 8.10 to 9.10 dollars per bushel since mid-July, and analysts look for this range bound to continue. Analysts expect U.S. farmers to store soybeans and sell the large forward carries.
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