Weather, market sentiment, growing regions, who dominated the agricultural products market in the second quarter?

CME Group ·  Apr 16 10:37

Weekly Overview

Price changes this week

Over the past week, CBOT agricultural product prices have basically fluctuated in the range, but soybean oil prices have declined. The USDA report for April is in line with market expectations, with minimal volatility, as people now pay more attention to planting progress and weather effects.
We are entering the so-called weather market, and long-term pricing for commodities will largely depend on weather forecasts and actual conditions in key growing regions. The importance of this stage has been amplified by the current tight balance between supply and demand for various crops, limiting the margin of error when weather adversely affects yield.
This situation has increased the sensitivity of prices to potential weather disturbances. In particular, stocks of corn are still large, but are constrained by falling expectations and falling production in Argentina.

Soybean Control Fund Net Position (Contract)

On the other hand, Russia's ongoing phytosanitary problems have brought uncertainty to the wheat market, affected global export trends, and responded to weather patterns that will affect Russia's export capacity in the near future.
In terms of financial positions, the COT report highlights a mixed sentiment where controlled funds sell in corn and oilseed complexes but buy wheat and maintain a clear short position in the latter.
Once the planting and inventory reports are released, the market's focus will shift to the critical July/August planting schedule and weather effects, which will determine much of this season's production results.

Corn Control Fund Net Position (Contract)


The wheat market showed a complicated situation last week. Wheat futures closed with mixed ups and downs, reflecting developments in different regions. Kansas City futures rose as concerns about soil water loss in the southern and western plains grew. Old crop supplies from Europe and Russia continue to dominate recent price trends, but as new crops grow, weather will be a more influential factor in determining prices.
The Russian agrophytosanitary regulator warned about the integrity of Russian grain exports, and the selective impact on goods shipped to certain countries/regions exacerbated the situation.

CBOT Wheat Control Fund Net Position (Contract)

As the northern hemisphere enters a new growing season, global stocks outside of Europe and Russia are limited, highlighting the need for a significant increase in production. The market is particularly sensitive to fluctuations in production, particularly potentially extreme weather in key regions such as France, Ukraine, and Russia. Looking ahead, until late May, the focus will be on weather conditions in the northern hemisphere, which require ideal conditions to support the bearish trend throughout the spring and early summer markets.
In our opinion, the Kansas wheat crop problem may be exaggerated, and if average rainfall remains flat in the future, the Kansas HRW should increase the inventory of new crops.
Corn futures did not change much, as the battle between large stocks and strong demand in the US continues. Global corn trade during the summer months is likely to depend on weather conditions in Brazil and Brazil's second crop of corn production, as US corn supplies will not be available until later this year.
Weather now plays a critical role, and the reduction in the margin to balance supply and demand is making prices more sensitive to climate change. Producing less than 175 bushels per acre could significantly tighten new crop inventories and increase price fluctuations.
As far as production risks are concerned, Brazil's drought and US production of less than 175 bushels per acre may drive up prices, but current conditions in the Brazilian state of Mato Grosso and parts of the US and Western Europe are conducive to timely planting.
Over time, the key factors that determine the price of corn will be South American production and weather conditions in the northern hemisphere during key production determination stages.

Oilseed complex

Soybean futures in the oilseed market closed lower, but due to a rebound over the weekend, soybean futures eventually rebounded above this week's low. Although limited demand expectations led to an earlier downtrend prior to the release of the US Department of Agriculture and CONAB's report, this trend became a reality.
USDA's adjustments reflect a slight increase in final soybean stocks, highlighting the evolution of the balance sheet under volatile market conditions.

Soybean Oil Control Fund Net Position (Contract)

Soybean Meal Control Fund Net Position (Contract)

The oil stock sector is currently under pressure due to weakening domestic cash prices for soybean oil, which indicates a further decline in the short term, while soybean meal may receive some support after the recent sell-off. The fund has become a net seller of soybeans, continuing the trend observed in recent weeks.
Looking ahead, the main focus of the market is likely to shift to planting progress and weather effects during the growing season, with additional attention to potential demand changes in major importers such as China.

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