Chicago (US), December 12: CBOT agricultural futures closed mixed in the past week as the U.S. central bank raised its lending rate by 0.5 percent to its highest level in 15 years at 4.25-4.50 percent.
Chicago-based research company AgResource maintains that a 5-percent U.S. lending rate will not be enough to put the U.S. inflation rate back to the Fed's 2-percent target. Peak inflation has been found, but surging wage growth underpins the natural rate of inflation between 3-4 percent.
The 2023 outlook for CBOT agricultural futures will be sideways to lower on slowing U.S. and world economic growth.
CBOT corn futures recovered slightly though a downtrend remains intact, and the market has been unwilling to move above 20-day moving averages. U.S. export demand is likely to improve seasonally in winter or early spring, but U.S. corn end stocks will still be getting larger, not smaller.
U.S. wheat futures ended higher on the week, but the market continues to struggle at major chart-based resistance. AgResource's outlook for wheat leans slightly bullish relative to current prices as Black Sea conflict premium has been liquidated, and funds hold a sizable net short position in Chicago and the market moving forward must contend with weather-based logistical risks of Russia.
Severe drought lingers in the U.S. Plains and North Africa that could cut 2023 production. AgResource sees fair wheat value between 7.40-8.00 dollars into late winter. South Hemisphere harvest pressure will end by late month.
As global demand growth will struggle well into next year amid weak importer currencies, wheat outlook will be sideways.
Soybean futures were slightly lower at the end of a quiet week of trade. The U.S. export pace is in decline and sales are starting to dry up as world buyers direct their attention to the oncoming South American harvest.
Brazil has nearly finished planting, while early season harvest will be underway in the next month. There is no reason to think that Brazil will not produce a record large crop. Concerns for the Argentine crop continue. Weather in the coming weeks will be critical for yields in Southern Brazil and Argentina.
U.S. crush margins remain historically strong, and the National Oilseed Processors Association November crush data indicated that crush rates will be at or near record large. This trend may continue in the year ahead.
Source: Xinhua
