On Friday, the values of soybean and corn in Chicago lost more ground, with both markets expected to close the week down due to rain projections in drought-stricken South American producing areas. Wheat is set to drop for the third week in a row due to a better supply outlook. As of this week, the most active soybean contract on the Chicago Board of Trade (CBOT) Sv1 had fallen 0.9 percent to $13.65 a bushel, bringing the weekly loss to more than 3%. This week, corn Cv1 is down 3.4 per cent, and wheat Wv1 has dropped more than 2%.
According to traders, weather forecasts show that dry portions of Argentina, the world’s leading supplier of processed soy and the second-largest producer of corn, may have significant rainfall starting late this week. In a crop assessment released on Wednesday, the United States Department of Agriculture (USDA) cut its soybean and corn production estimates for Brazil and Argentina. Brazil is expected to harvest just over 134 million tonnes of soybeans this harvest season, down 7% from the previous November. This is a projection by agribusiness consultancy Agroconsult, as the country’s average yields may fall to a six-year low due to a drought. The prediction also indicates a 2% decrease from the 137.1 million tonnes produced in 2021.
According to Wang Tao, a Reuters commodity expert, the CBOT soybeans March contract SH2 may test a support at $13.56-1/4 per bushel, a break beyond which could prompt a slide into the $13.38-1/2 to $13.46-1/2 area. China’s soybean imports decreased in 2021 compared to the prior year, the first yearly drop since 2018, according to customs data, as demand from the country’s enormous livestock sector weakened. China, the world’s leading importer of soybeans, imported 96.52 million tonnes in the first half of 2021, down 3.8 per cent from the previous year’s total of 100.33 million tonnes, according to information from the General Administration of Customs, as hog margins fell and wheat feeding increased. The International Grains Council upped its global wheat output projection for 2021/22 on Thursday, owing in part to a better outlook for the harvest in Australia.
The intergovernmental agency raised its world wheat crop forecast for 2021/22 by 4 million tonnes to 781 million tonnes in its monthly report. The USDA also estimated that the U.S. winter wheat acreage, end-of-season stockpiles, and world wheat stocks would be higher than average analyst projections. According to analysts surveyed ahead of the monthly National Oilseed Processors Association (NOPA) report due on Tuesday, U.S. soybean manufacturers likely crushed a near-record volume of soybeans in December due to sufficient crushing supplies and good processing margins. Therefore, this is a situation that needs to be closely monitored.
Article by: Hari Yellina (Orchard Tech)