Roundup: Chicago Board of Trade agricultural futures surge

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CHICAGO, Feb. 19 (Xinhua) -- Chicago Board of Trade (CBOT) agricultural futures have surged on geopolitical tensions over Ukraine in the past week, Chicago-based research company AgResource noted.

Hedge funds are continuing to pour capital into the raw materials market. AgResource stays bullish on agricultural futures.

Corn futures ended higher as the market digested rising Black Sea tensions and South American crop losses. Improved rainfall activity in Argentina next week is noted, but this rain is thought to come too late to materially salvage yield potential. And an overall pattern of warmth and dryness remains probable in March.

AgResource also noted that any disruption to Black Sea grain flows will have a far greater impact on corn values than wheat. Record Ukrainian exports of 33-34 million metric tons are needed to fill gaps left by reduced South American crops. Black Sea issues aside, Brazilian exports will be zero into July while Argentine exports will also be curtailed.

Corn's bullish flavor will persist until the Midwest's summer climate pattern is better understood. And there is no tolerance for additional yield loss in either Brazil's safrinha crop this spring or across the North Hemisphere this summer. Corn prices look to consolidate recent gains in a range of 6.20-6.70 dollars for now, according to the company.

U.S. wheat futures ended the week sharply higher. Managed funds in Chicago have been forced to cover recently established shorts amid the increasing unrest at Ukraine borders.

Odds are elevated that a dire drought worsens across the Southern and Central Plains, AgResource suggested, adding that wheat yields in Texas, Oklahoma and Kansas will drop 10-12 percent below trade based on current soil moisture shortages. Yield loss of 15-20 percent is likely if regular rains fail to materialize in March.

Wheat's long-term outlook stays bullish. Export production growth of 20 million metric tons is needed to build exporter inventories in 2022-2023 amid reduced carryovers and rising global consumption.

However, the building of exporter stocks is unlikely amid U.S. Plains yield losses and the need for record North African imports due to drought. Upside is pegged at 8.80-9.20 dollars for spot Kansas wheat during second half of 2022. Wheat's price focus is shifting to Northern Hemisphere weather into May, said the company.

Early week selling in soybeans uncovered new speculative demand that carries the complex higher into the end of the week. March soybean found support at 15.50 dollars and closed the week above 16.00 dollars for the first time since May.

Brazil's state-owned National Supply Company estimated that harvest progress had advanced to 25 percent complete, up from 17 percent in the previous week and just 10 percent last year. Yield estimates continue to decline and traders discussed the potential need for soybean imports into Southern Brazil processing plants due to yield losses.

The Brazilian ship lineup continues to swell with February exports totaling 4.5 million metric tons, with another 6 million metric tons scheduled to load, according to AgResource, stressing February exports of 8-9 million metric tons, as against 5 million metric tons last year. Brazil will be a larger soybean exporter into early summer, but is expected to be sold out by July. World demand is expected to return to the United States from May onward with old crop export estimates on the rise.

The U.S. Department of Agriculture's annual Outlook Forum will release initial new crop balanced sheets in the week ahead. Tightening U.S. and world stocks will support the CBOT on breaks, said AgResource, warning one should be careful in chasing rallies. Enditem

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