Weekly Overview
Price changes this week
The past week saw a slight rebound in cereal and oilseed prices after a period of decline. This recovery is still taking place despite uncertainty about the area under cultivation of crops in the US.
The US corn market is facing large inventories, which reduces the possibility of price increases in the face of secondary crop problems. By contrast, the soybean and wheat markets are more sensitive to the performance of northern hemisphere crops, and given tight balance sheets, there is little room for error.
Soybean Management Fund net position (in contract units)
Managing the IMF continued the net sales trend of almost all commodities, and short corn positions were significantly reduced to less than 300,000 contracts.
However, soybean shorts have expanded to over 160,000 contracts, increasing the possibility that bears will make up a rebound if any crop loss risk becomes a reality.
Traders are now paying close attention to the upcoming US Crop Profit and Planting Intent Report, which will be critical in shaping market expectations.
Net positions in the Maize Management Fund (in contract units)
grains
The performance of US wheat futures is mixed. Hard wheat futures are expected to face greater pressure compared to CBOT wheat due to the expected increase in HRW inventories.
Driven by increased shipments to China, the market is actively seeking SRW wheat, which has affected the base difference and price spread.
Despite current sufficient supply, volatility remains high due to forward supply risks and ongoing pressure on supply in the Black Sea region.
The long-term outlook for wheat depends on a decline in the area under winter wheat cultivation in the US, Western Europe, and Ukraine.
The positive attitude of Russian exporters is dragging down global markets, and large EU/Black Sea inventories are expected to limit rebound efforts.
However, US SRW wheat is expected to perform better than other wheat varieties in May, although challenges remain if Russia and the EU do experience production losses next year.
CBOT wheat management fund net position (in contract units)
Corn futures have rebounded, gone through the liquidation phase, and are concerned about weather and supply risks in 2024.
The fund's short recovery provided some price support and brought export sales in line with USDA forecasts.
The next price reset will depend on the production performance of Brazil's Safrinha (second crop) corn. Abnormal subsoil humidity in major regions of Brazil suggests potential yield losses.
The US corn market faced large inventories, limiting the short-term price rebound.
However, long-term supply risks and the possibility of a drop in Brazilian production due to the La Niña phenomenon could increase the price premium.
South American production and its impact on the global balance of supply and demand will affect the long-term value of corn.
Oilseed complex
Soybean futures initially fell to a new low, rising at the end of the week. Continued net sales of funds put downward pressure on the downside, while the slowdown in US exports and the acceleration of Brazilian exports were key drivers of the market.
As harvesting progressed, the Brazilian soybean premium increased, and the impact on the cash premium structure was different from the previous year.
Soybean oil manages net positions in the IMF (in contract units)
Soybean meal management fund net position (in contract units)
Influenced by upcoming weather conditions and soybean cultivation area estimates, the focus is still on the scale of South American crop cultivation.
Structural demand for oil is expected to drive oil stocks higher, and the soybean market is closely monitoring how South American weather patterns and planting area decisions affect future price trends.
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