CHICAGO, Oct. 24 (Xinhua) -- CBOT agricultural futures rallied strongly in the past week as U.S. dollar index declined in the runup to the Nov. 3 U.S. presidential election, Chicago-based research company AgResource noted.
U.S. trade representative announced that China has booked 71 percent of its agricultural purchase obligation for 2020 with the total likely to near 30 billion dollars before yearend. China's purchase of U.S. soybeans accounts for at least 31 million metric tons of U.S. export demand.
CBOT corn futures continued to add premium amid improving U.S. demand. Media reported that China could act to issue another 5 million metric tons of TRQ import licenses, which would validate ideas that Chinese demand is understated, AgResource noted.
Otherwise, corn futures continued to be driven by rising cash markets in South America and Ukraine. Corn rose 0.55 dollars per bushel this week and has rallied 1.60 dollars per bushel, or 40 percent, since August in Brazil. It's clear the cash market in South America is working to slow future export potential to assure adequate supply for the domestic market. This bodes favorably for December-March U.S. export demand. Even at current prices, U.S. corn is the world's cheapest feedgrain.
Wheat rallied to a new six-year high, as risk premium continued to be added amid ongoing extreme drought in Southwest Russia, sizable winter wheat producing region. There could be new threat to exporter milling wheat supplies if excessive rainfall persists across Eastern Australia, AgResource warned. Feed wheat will be rather valuable. Close attention will be paid to weather in New South Wales and Queensland in Australia over the next 30 days.
But there's no indication of U.S. wheat export demand improving. It's also known that Russian farmers have seeded record winter wheat acreage this autumn. AgResource held that it's just a matter of whether recently seeded crops adequately germinate or fail.
Volatility in wheat will stay elevated. The potential arrival of rain in Russia will be taken as bearish. Technically, resistance lies at 6.75 dollars.
November soybean closed at a new contract high and spot futures were the highest since July 2016. Export prices at the Gulf remain historically strong, while basis along the rivers started to rally as harvest slows and barge freight started to move lower.
AgResource estimated that the U.S. soybean harvest will be 90 percent complete by Sunday. What is worth noting is that this year's counter seasonal harvest rally has not been led by yield concerns. In fact, the U.S. Department of Agriculture (USDA) maintained a record yield estimate.
Given demand strength for exports and crush there is no room for yield/production falls. In longer term, the need for an additional 6 to 8 million soybean acres in 2021 will underpin November 2021 soybeans below 9.25 dollars, while the next upside target rests at 11.00 dollars, AgResource predicted.