Analysis of agricultural products** changes: what are the reasons behind wheat and soybean meal?
Introductory. Wheat & Soy Flour *** Wheat *** Soy Flour ** Significantly**. Traders are beginning to pay attention to weather conditions and crop yield estimates in South America. Despite improved weather forecasts in South America, agricultural areas in northern Brazil are still battling drought and soil moisture remains low. In addition, the soybean management currency** is a net seller in multiple markets, with large short positions in corn and wheat, as well as long positions in corn and soybean meal.
Wheat** Wheat** recorded some gains last week, but remained within the previously established trading range and did not make new highs.
The market is now starting to focus on the reduction in southern hemisphere exports** and the need for a favourable winter in Russia to maintain record export levels. Wheat logistics in Russia have already been negatively affected by strong winds, and harsh winter weather conditions will also cause difficulties in the grain transport belt between Ukraine and central Russia. At the same time, global animal feed demand is likely to shift to wheat as Brazil's corn production is expected to decline. However, this impact can only be truly assessed at the end of the agricultural year.
Corn**. CBOT corn*** picked up slightly last week, but briefly hit a multi-year low in December***. This is further evidence that the near-term range is likely to be a sustained low. The lack of new fundamental news in the market means that ** is still range-bound. The abundant spot** offset the increase in demand for U.S. exports, with no sustained leverage for both buying and selling. Large U.S. corn stocks continue to weigh on the market, but risks for the future remain.
Brazil's first corn crop is at risk due to planting delays due to unusual weather in northern Brazil. Although the risks at the lowest point of the harvest appear to be limited, the market is still struggling to stimulate demand. At the same time, ethanol is profitable, and U.S. corn remains the world's cheapest and most reliable winter animal feed grain, adding some uncertainty to the market. Due to the unusual climate in northern Brazil, the U.S. export potential is vast. Due to the shortage in South America, the United States could become an important country in the world corn market. In addition, soybeans and soybean meal*** are likely to increase feed demand, further supporting corn**.
Soybean meal**. Mainly dragged down by soybeans, soybean meal was significantly last week. The market is concerned that weather conditions in South America will affect crop yields, which could negatively impact soybeans** and in turn, soybean meal**. At present, the weather in northern Brazil continues to be unfavourable, and drought conditions persist, putting some pressure on soybean planting and growth. At the same time, China's demand to buy soybeans from the United States has weakened. Sales of China's soybean management currency** pushed soybean meal lower**. In addition, the abundance of U.S. soybean inventories has put the market off the worries, which has also put pressure on soybean meal.
Conclusion. This week's wheat *** is mainly due to a decrease in the southern hemisphere**. Corn continues to fluctuate due to surplus in the U.S. and weather conditions in Brazil. Looking ahead, the market will continue to focus on weather conditions and crop yield estimates in South America, as well as changes in global demand, due to weak demand from soybeans and soybean meal in China. These factors will determine changes in wheat, corn and soybean meal**.