CHICAGO, Aug. 1 (Xinhua) -- With less than 100 days to go before the 2020 U.S. Presidential election, CBOT agricultural futures trended down in the week ending July 31 as investors show more caution.
Chicago-based consulting company AgResource stayed bearish about any rallies, warned against chase of rally, and suggested being prepared for a weekly reversal in August.
Corn futures ended sharply lower amid ideal Central U.S. weather and a lack of demand growth outside recent Chinese purchases. In the past five weeks, U.S. Department of Agriculture (USDA) has cut U.S. corn seedings by 5 million acres while China has secured 230 million bushels of U.S. new crop corn. Corn futures has fallen 36 cents since July 1, which is logical when a U.S. yield of 181 bushels per acre or better will completely offset Chinese purchases to date.
Weak growth of ethanol consumption suggests that U.S. corn end stocks in 2020 may reach or exceed 3 billion bushels, AgResource noted.
Highly favorable Central U.S. weather is most probable throughout the next 30 days; and Brazilian farmers aim to further boost safrinha corn seedings in 2021. Based on these, AgResource predicted that corn oversupply may extend for a year.
Wheat futures ended the week lower. U.S. wheat feeding estimates are in retreat amid rising U.S. corn yield potential.
Russia's cumulative wheat yield is now above last year. This along with a weakening currency will keep exporters aggressive into October, when the government announces its Nov-June export quota. Australian weather forecasts are also improving. The EU weather models are in broad agreement for soaking rain that will aid a vast majority of Aussie wheat production area, making Aussie wheat crop of 26-30 million metric tons possible, a 80-100 percent increase from 2019.
Early week strength in the soybean market was washed out by stronger than expected crop condition ratings on Monday, AgResource noted. Following another week of favorable rains, the Chicago-based company looks for a 1-2 percent increase in crop condition ratings this week, which continues to support an idea of record national soybean yield.
China has been a large buyer of U.S. soybeans in recent weeks as export demand seasonally shifts from South America back to the United States. However, there is no evidence that Chinese demand will drive U.S. exports above the USDA's 2,050-million-bushel forecast.