Chicago corn and soybean futures experienced a modest rise on Friday but stayed close to their lowest levels since 2020. This trend points to a challenging week for these agricultural commodities, driven by favourable crop weather in the United States and an expectation of abundant supply.
Wheat futures, although flat, are also on track for a weekly decline, maintaining prices near four-month lows.
See: Soybean trading at 10.985 as seen on the VT Markets app.
The most-active soybean contract on the Chicago Board of Trade (CBOT) increased by 0.5%, reaching $10.47-3/4 a bushel by 0511 GMT. CBOT corn rose by 0.2% to $4.06 a bushel, and wheat remained unchanged at $5.35-1/4 a bushel.
However, all three contracts faced weekly declines, with soybeans, corn, and wheat down between 1.7% and 2.8% from last Friday’s close, marking their second consecutive weekly loss.
Current market conditions reflect a well-supplied environment. U.S. crop weather has generally been beneficial, bolstering expectations for large U.S. corn and soybean harvests. The U.S. wheat harvest is progressing rapidly, adding new supply to the market.
Also read: Wheat poised for largest monthly decline in 2 years due to harvest pressure
China is experiencing an oversupply of soybeans due to record high purchases, which have boosted stockpiles at a time when animal feed demand remains subdued.
Additionally, soybeans face pressure from the potential renewal of trade tensions between the U.S. and China, especially with the prospect of a Donald Trump election victory, which could hinder U.S. exports to China.
The International Grains Council (IGC) recently raised its forecast for 2024/25 world corn production by 2 million metric tons to 1.225 billion tons and its world wheat output estimate by 8 million tons to 801 million tons. These adjustments further solidify the expectations of strong supply in the global market.
Weekly export sales of U.S. old-crop corn totalled 437,800 tons, falling below trade expectations, while new-crop corn sales reached 486,700 tons, according to the U.S. Department of Agriculture (USDA).
On a brighter note for soybeans, the USDA confirmed private sales of 510,000 metric tons of U.S. new-crop soybeans to undisclosed destinations on Thursday, marking the largest daily “flash sale” of U.S. soybeans since November.
Commodity funds played a role in these movements, with traders indicating that funds were net buyers of CBOT soybeans on Thursday, net sellers of corn, and net even in wheat.
The ample supply and favourable weather conditions will likely keep downward pressure on prices. However, any adverse weather changes or geopolitical developments could alter this trend. Traders should closely monitor weather patterns and international trade policies, particularly those involving China and the U.S., to make informed decisions.
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