Chicago agricultural commodities record a volatile week

Chicago

CHICAGO Board of Trade (CBOT) grains futures have seen a week full of fluctuations, with a overall downturn prevailing.

During the trading week which ended on Aug 18, the most active corn contract for December delivery fell 9 cents, or 2.40 per cent, to US$3.6575 per bushel. A bearish report of US Department of Agriculture was believed to be the main factor for the fall.

Apart from the USDA report on Monday mentioning better corn crop conditions, the favourable weather in the leading agricultural state of Iowa added more pressure on corn futures. Additional pressure came from South American corn exports, which were ramping up.

The good news for corn was that the ethanol market remained strong in the US. Ethanol plants, using corn as raw material, responded to the recent boost in production margins, producing nearly record-high ethanol in recent weeks.

December wheat delivery last week suffered a three-straight-day sharp decrease, but managed to recover some losses in the end.

Ample world supplies and fund selling contributed to the downturn. Traders were talking about record-high combined Ukraine/Russian production, though logistic issues might prevent Russia from exporting more than 29-31 million tonnes of wheat. That's roughly the volume of last year.

Price is another factor. Gulf wheat of the US is the world's cheapest supply, on an FOB basis. A weak US dollar will help American farmers export more.

November soyabeans went down 7.25 cents last week, or 0.77 per cent, to US$9.3775 per bushel.

Brazil's soyabean exports are almost on track to meet the USDA's record projection, which is expected to rise 21 per cent. Export commitments are now lagging only a bit below the pace.

China's crushing margins were reportedly up sharply last week thanks to lower soyabean futures and a stronger yuan. The "spot" crush margin jumped 114 yuan and is now profitable for the first time since late February.

China remains the world's largest soyabean importer. CBOT soyabean prices were lifted, though moderately, for three consecutive sessions last week, obviously boosted by the news that a group of Chinese importers signed letters of intent to buy 3.8 million tonnes of US soyabeans in Omaha, Nebraska. However, soyabean futures failed to post gains on a weekly basis. XINHUA