Wheat: Supply Risk Supports Price Rebound
This week, Chicago wheat futures rebounded strongly after hitting a new low, reflecting market concerns over the Russia-Ukraine situation. Russian winter crop conditions have reached a record low, with high-quality crops accounting for only 31%, significantly down from last year's 74%. Drought and planting difficulties are casting doubts on the wheat production outlook for 2025. Meanwhile, uncertainty in Ukrainian grain exports is increasing, with Romania potentially restricting grain shipments via the Port of Constanta, further elevating supply risks.
U.S. HRW wheat futures have risen for three consecutive days as the market prices in the possibility of supply disruptions in advance. A weaker dollar further enhances the competitiveness of U.S. products, and if the Russia-Ukraine situation worsens, U.S. wheat exports may increase.
Corn: Robust Export Demand Keeps Prices Strong
CBOT corn futures have performed steadily this week, supported by strong international demand and domestic basis strengthening. As of November 28, U.S. corn export sales reached 1.7 million tons, far exceeding market expectations. Competition pressure from Argentina and Brazil has eased, making U.S. corn more attractive in the global market.
Speculative funds have significantly increased their net long positions in corn over the past five trading days, indicating market confidence in price increases. Going forward, abnormal weather in South America may further boost export demand, providing upward momentum for corn prices.
Soybeans and Derivatives: Facing Competitive Pressure, Showing Significant Price Fluctuations
According to the U.S. Department of Agriculture, the U.S. recently sold 136,000 tons of soybeans to China, with a total export sale of 2.3 million tons in the week ending November 28. However, falling Brazilian soybean prices are enhancing its export competitiveness, potentially challenging U.S. exports.
In the domestic market, soybean spot basis shows varied performance. Sufficient soybean meal supply, coupled with slowing export demand, is putting pressure on CBOT soybean meal futures prices. Meanwhile, soybean oil is experiencing a strong rebound due to expectations of reduced Canadian canola production, and the seasonal rise in vegetable oil demand during the Northern Hemisphere winter also provides price support.
Future Outlook: Tug-of-War between Bulls and Bears Amid Geopolitical Risks
The grain market's core driving forces remain centered on geopolitical risks in the Russia-Ukraine region, competition from South American exports, and U.S. export performance. In the short term:
- Wheat: Russian-Ukrainian supply risks may further push up prices;
- Corn: Export resilience and South American weather will be key variables;
- Soybeans: Attention should be paid to Brazilian export competition and domestic processing demand.
Additionally, recent fund accumulation in commodities reflects market optimism, but unexpected events could trigger a swift shift between bulls and bears. The medium to long-term trend will be influenced by global weather changes and production data from major regions. Investors need to closely monitor export dynamics and basis changes to grasp market trends and potential risks.
