Roundup: CBOT agricultural futures drop on Ida-induced infrastructure damages

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CHICAGO, Sept. 4 (Xinhua) -- Chicago Board of Trade (CBOT) agricultural futures went lower in the past week due to the loadout damage from hurricane Ida. Chicago-based research company AgResource holds that agricultural futures are in bottoming process.

But CBOT agricultural futures' uptrend is intact, as world demand is strong with China likely to lead a restocking effort of its reserve into early 2022. And a weak U.S. dollar will pull fresh funds into U.S. agricultural futures markets, helping fuel a further rally into yearend.

CBOT corn futures ended sharply lower on the week following the closure of Gulf export terminals. AgResource noted that the Gulf accounts for some 55-60 percent of total U.S. corn exports. The disruption of grain movement is important as the harvest in Southern U.S. starts to quicken. Negative charts have exacerbated speculative selling.

However, there is no change to bullish corn fundamentals. U.S. Department of Agriculture (USDA) is expected to lower its U.S. national yield forecast by 1-2 bushels per acre (BPA) in its September report. Argentine corn exporters have been rushing to beat a further worsening of Parana River logistics. Importers simply have no choice but to buy U.S. and Ukrainian corn between October and June of 2022. U.S. corn is highly competitive with Ukrainian origin into Asia. Once Gulf activity returns, a demand led rally will begin.

There remains the need for corn area expansion in 2022 of 3-4 million acres. The rapid development of La Nina poses threats to weather in Argentina in the December-February period. Risk leans to the upside as CBOT corn is forming its annual bottom. The Gulf damage from Ida just lowered harvest low price targets and extended the bottoming process.

U.S. wheat futures ended slightly lower as wheat retains its status as the bullish leader of the world grain space. This is mostly due to the continued tightening of major exporter balance sheets amid reduced production in Canada. Gulf elevators only account for a much smaller portion of U.S. wheat exports, as most U.S. wheat export shipments are executed off the Pacific Northwest (PNW).

Most importantly, there's been no sign that total world wheat trade is slowing at current elevated prices. Record global wheat consumption remains probable in 2021-2022. Amid the loss of quality in Europe and a rapidly rising export tax in Russia, AgResource maintains that U.S. exports begin to find non-traditional destinations in winter and beyond.

The contraction in U.S. wheat stocks accelerates unless some 1.0-2.5 million additional acres are secured in 2022-2023. Wheat's upward price trend is intact.

Soybean futures were under pressure in the first half of the week due to logistical issues in the Gulf from Ida. Damaged elevators, power outages, and closures on the lower Mississippi River seized the cash markets. At the same time, barge freight soared as the number of empty, upbound barges declined.

Rising freight and the shutdown of the primary U.S. export market weighed heavily on Delta cash basis and CBOT futures. It will take a week before initial export operations can resume.

Prices in Chicago have fallen back to levels that world end-users see value. It's a short-term Gulf logistical problems that is weighing on U.S. cash/futures markets. A sharp recovery should be underway in the last half of the month as new crop exports get underway in a big way. Enditem

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