CHICAGO, Nov. 20 (Xinhua) -- Chicago Board of Trade (CBOT) agricultural futures closed mixed this week as U.S. dollar rallied to strong gains, Chicago-based research company AgResource noted.
Amid strong world demand and tightening supplies, AgResource stays longer term bullish of commodities, but holding this not the time to be chasing a rally.
Corn futures ended slightly weaker, and back-and-forth trading continued. Weather forecast is offering additional needed rain to Cordoba and Northern Argentina late next week. Weather in South America will be the principal driver of price direction beginning in December as the world cannot afford to lose a ton of the 2022 South American corn crop.
AgResource's long-term corn research is turning more bullish. China has been more active in securing Ukrainian corn and French feed wheat in recent weeks. China is expected to return to the U.S. corn market as domestic prices stay perched above 10.50 dollars per bushel, a record for late autumn.
Any confirmation of drought in Argentine and Southern Brazil will rally March corn above 5.90 dollars and break spot resistance that has held since late June. This would project a one-dollar per bushel rally in corn into March or April with an upside target of 6.90 dollars. Downside risk over the next 45 to 60 days is limited to 10 to 15 cents. As just 30 percent of the Argentine corn crop is seeded, the December weather is important.
Wheat futures ended this week mixed. Massive rail issues in western Canada will severely reduce Canadian exports, leaving more supply available to the U.S. domestic market.
Otherwise, wheat fundamentals are unchanged and bullish. World trade has not slowed at high prices, and a new supply threat has emerged as excessive, unwanted rain returns to eastern Australia. A wet pattern is probable there into late December. The world cannot afford the loss of additional high quality milling supply.
Wheat's long-term bull market has been centered on steady contraction in exporter stocks. The bull market may end once exporter stocks begin to build, which is unlikely to occur until mid-2022 at the earliest. AgResource holds that the upside potential rises to 9.00 dollars if Australian rainfall forecast proves correct and milling wheat quality is downgraded.
Soybean futures rallied for a second consecutive week. Weather in South America is far from perfect. Too much rain is falling across Mato Grosso/Goias and it is too dry in the far southern Brazilian state of RGDS. There is also the statistical risk that the U.S. yield in January may be trimmed by 0.1 to 0.3 bushels per acre to further reduce U.S. supplies.
The U.S. window for new export sales will be closed by February which should produce a late year high.
Nearby it is South American weather and the flow of fund into commodities due to inflation. It doesn't take much soybean yield loss in South America to turn the exporter balance sheet extremely tight.