nolimitpubpoker| Potential decline in Black Sea production supports wheat prices, soybeans rebound seasonally

Source: CMEGroup of Zhi Merchants Institute

Price changes this week

With plantingNolimitpubpokerThe impact of weather forecast dynamics on market prices has become increasingly obvious, reflecting the potential impact on crop scale in the coming months. In particular, market volatility is closely related to the severity of weather conditions and the corresponding adjustment in the balance of supply and demand for wheat, corn and oilseeds.

Soyabean and soybean meal prices closed higher this week on fears of crop losses due to excessive rainfall and flooding in Rio Grande. Initially, crop losses were estimated to be as high as 7 million metric tons, but have since been adjusted to 1 million to 3 million metric tons. The final extent of these losses has yet to be determined in the coming weeks. At the same time, the price of soybean oil is divided, showing a downward trend.

The weather also played a key role in price adjustment, particularly wheat in Kansas and the Black Sea and soybeans in Rio Grande.

The regulated fund shows a strategic shift in its position, reducing its short position in wheat and increasing its net long position in soybean meal. Overall, funds maintain short positions in wheat, soyabeans, corn and soyoil, and soymeal is the only commodity that attracts long positions.

Over time, during this critical period, the focus of the market is expected to turn to planting progress and weather conditions, and then to the weather in July and August, which is crucial to determining crop yields.

Net position of Corn controlled Fund (contract)

grain

The US wheat market closed higher this week on the back of a continuing drought in the Black Sea region and lower production forecasts from the European Union and Russia. The tightening of the balance sheet of supply and demand in exporting countries, in particular the potentially sharp decline in EU / Black Sea production, supported the bullish outlook for wheat prices. However, improved weather forecasts for Russian growing areas may allay these concerns.

Wheat prices are under additional pressure as severe weather conditions persist in growing areas in Russia and Kansas. If these conditions are not improved, the price of hard red winter (HRW) wheat may rise further.

However, the soil moisture in Kansas is better than in previous dry years, which helps to keep wheat yields higher than before under similar drought conditions.

Weekly trend of CBOT Wheat Futures (ZW)

Global wheat dynamics continue to be dominated by a large supply of old crops from the European Union and Russia, but as the new growing season advances, the weather will be the main driver of price movements.

WithNolimitpubpokerAs we enter late May, the weather problem in the European Union / Black Sea is particularly prominent, and the growth conditions in the Northern Hemisphere are the top priority.

Weekly trend of CBOT Corn Futures (ZC)

CBOT corn futures rose sharply under the combined influence of rising global wheat prices, uncertainty about South American yields and a slowdown in planting in the United States and France due to weather conditions.

Corn production in Argentina has declined, while Brazilian GM corn crops face a dry season with higher-than-normal temperatures, and price premiums have increased due to supply problems.

If weather fears become a reality, the record large short positions held by funds at this time of year will pose huge upside risks.

In the long run, the fair value of corn will be closely related to summer weather conditions in the United States and potential production shortages in South America.

Oilseed complex

The soyabean market rebounded strongly last week, its strongest weekly gain since June. Nearby soybean futures rose 42 cents, with soymeal rising sharply due to bad weather in Rio Grande do Sul and harvest delays in Argentina. This has led to speculation about short-term supply restrictions in the soybean meal market.

Although losses due to torrential rains in Rio Grande are expected to fall from the initial estimate of 7 million metric tons to 1 million to 3 million metric tons, the actual impact on crop quality and yield will take several weeks to be fully determined.

At the same time, exports from the US soybean meal market are strong, and global end-users are likely to become increasingly dependent on US supplies in the short term as the Argentine harvest is delayed.

Weekly trend of CBOT soybean futures (ZS)

The weaker price of soybean oil reflects a broader market adjustment. However, due to the continued strong demand for renewable diesel and the stable soybean meal market, there is an opportunity to be long oil stocks.

Looking ahead, in addition to demand fluctuations in major markets such as China, weather concerns during the planting and growth stages may be key factors driving market volatility.