Weekly CBOT agricultural futures trade mixed

CBOT agricultural futures traded firm in the week despite some corrections. Chicago-based research company AgResource stay bullish on agricultural futures on weather concern and strong export demand.

CBOT corn futures ended the week firm, but the market awaits South American yield results before embarking on the next bullish stage. U.S. exporters sold a record 293 million bushels of U.S. corn abroad in the week ending Jan. 28.

Crop health in Argentina has not improved despite needed rain during January. Later planted crops will pollinate in in early March. Safrinha seeding in Brazil will not be completed until mid-March. South American corn production could be revised downward by 3-7 million metric tons, and more if drought materializes in Central Brazil during April-May, AgResource noted.

U.S. weather risks are elevated as La Nina lingers into summer. This bull market only ends once a 180 yield is confirmed in the United States next July/August. The corn market has reached the upside target of 5.50 dollars, and new highs will hinge on South American weather or new Chinese demand for U.S. corn.

CBOT wheat ended lower amid some measure of Russian farmer selling and as Russian exporters are willing to add to export commitments above 295 dollars per metric ton.

However, while Russia's interior market is eroding, domestic basis in Europe and the United States is rising amid tightening supplies. Winterkill risks are high in Russia while a deepening drought plagues the U.S. Plains.

AgResource noted that amid record global wheat consumption, major exporter stocks/use will tighten further in 2021/22.

AgResource predicts that any perceived threats to Northern Hemisphere wheat production will rally CBOT futures to 7.00 dollars. For now, wheat will follow corn.

Soybean futures marked a week of narrow trade with support under 13.50 dollars. Market news was limited through the week, but the weekly U.S. sales report confirmed that exporters have now sold 97 percent of U.S. Department of Agriculture's (USDA) annual forecast. With January exports of 360 million bushels, the cumulative export rate stands at 183 percent of a year ago.

The U.S. balance sheet is dramatically tightening, and based on the export rate, the USDA should raise its forecast in the Feb. report, but U.S. stocks will not allow such an increase.

AgResource holds that any corrections will be short-lived and technical in nature. South American weather or Brazilian weather and yield data will determine the start of the next rally.