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During the session on Friday, October 13, 2023, soybean prices in Chicago continued to rise, aiming for the first weekly rally since August, after the US Department of Agriculture downgraded the US crop forecast. Wheat increased in price by 1.5% amid a lower forecast for global production of this crop, reports Reuters.
Corn is also becoming more expensive and may show a slight increase at the end of the week.
“The market did not expect the US Department of Agriculture to lower its soybean harvest forecast,” Commerzbank noted.
Rising soybean prices may prompt many American farmers to switch from corn to this particular crop as part of the new planting campaign, which will put downward pressure on the market in the longer term, said Victor Pistoia, an analyst at Rabobank.
However, in the short term, a record large harvest in Brazil will limit the potential for price growth, given that Brazilian crops are offered at a discount, the expert added.
By 0501 GMT, the most actively traded soybean futures on the CBOT rose 0.5% to $12.95 per bushel, and since the beginning of the week, quotes have gained 2.4%. Earlier this week, contracts fell to $12.51, the lowest since December 2021.
Chicago wheat was up 1.5% at $5.80 and corn was up 0.3% at $4.97 1/2.
The US Department of Agriculture lowered its forecast for global wheat production for the 2023-2024 agricultural year by 4 million tons, mainly due to an expected reduction in the harvest in Australia, which was hit by drought. This in turn led to a slight downgrade in reserve estimates.
The forecast for the wheat harvest in Argentina remained at 16.50 million tons. At the same time, the Rosario exchange expects that wheat production in the country will amount to 14.3 million tons compared to the previous forecast of 15 million tons. The downgrade in forecast is due to dry weather.
Meanwhile, on Thursday, Egypt announced the purchase of 470,000 tons of wheat as part of an international tender, with 300,000 tons of grain purchased being of Russian origin. In the cheapest offer, a ton of wheat cost $259.
Last month, CBOT wheat fell to a 3-year low of $5.40 per bushel due to the abundance of cheap Russian wheat in the export market.
Corn prices fell to a 33-month low of $4.68 in September amid large supply from Brazil and the United States. According to an updated estimate from the US Department of Agriculture, the country's corn harvest will be 15.064 billion bushels, which is 37 million bushels below analysts' forecasts.
