Roundup: High inventories, poor exports drive CBOT crop futures sharply lower

Source: Xinhua| 2019-08-18 00:05:17|Editor: Shi Yinglun
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CHICAGO, Aug. 17 (Xinhua) -- Chicago Board of Trade (CBOT) agricultural futures traded sharply lower in the week ending Aug. 16, mainly due to higher ending stocks and declining export sales.

The most active corn contract for December delivery was down down 37 cents, or 8.86 percent week on week, to close at 3.8075 dollars per bushel. November wheat was down 23 cents, or 4.6 percent, to settle at 4.775 dollars per bushel. November soybeans were down 12 cents, or 1.35 percent, to close at 8.7975 dollars per bushel.

On Monday, the U.S. Department of Agriculture (USDA) released its monthly agricultural supply and demand estimates report, projecting larger domestic ending stocks for the current marketing year.

According to the August report, 2019/20 U.S. corn outlook is for larger supplies, reduced exports and corn used for ethanol, and greater ending stocks at 2.2 billion bushels, up 171 million from the previous projection.

Market participants had expected some downward revision for corn inventory, given the delay of spring planting due to prolonged wet weather pattern and flooding that hit the U.S. Midwest.

Exports are lowered, reflecting U.S. export competitiveness and increasing competition from Argentina, Brazil and Ukraine.

The report sent CBOT corn prices some 11 percent lower in the first three days of this week.

The USDA also raised its outlook for 2019/20 U.S. wheat supplies and ending stocks. U.S. wheat production is expected to be up 59 million bushels to 1,980 million. Ending stocks will be 14 million bushels higher to reach 1,014 million.

U.S. soybean production for 2019/20 is now projected at 3.68 billion bushels, down 165 million on lower harvested area. Soybean exports are reduced 100 million bushels to 1.78 billion, reflecting reduced global import demand, mainly for China.

Apart from the bearish supply and demand report, official figures of export sales for the period of Aug. 2-8 added more pressure to CBOT crop futures.

The USDA reported net soybean sales reductions of 109,900 metric towns for 2018/19, down noticeably from the previous week and from the prior four-week average.

Net wheat sales were pegged at 462,200 metric tons for 2019/20, down 5 percent from the previous week and 2 percent from the prior four-week average.

Meanwhile, net corn sales were reported at 56,100 metric tons for 2018/19, up 32 percent from the previous week, but down 56 percent from the prior four-week average.

Although bargain buying and short covering toward the end of this trading week helped recover some early losses, all the three crop futures closed this week in the negative territory.

Considering the declining prices and dim export outlook amid trade tensions with China, the Federal Reserve Bank of Chicago pointed out in a recent report that the profitability of many corn and soybean farms in the U.S. Midwest will almost surely fall from their 2018 levels, possibly by a lot for some.