Grain futures dip amid Argentine floods and weak dollar.

On Thursday (May 22),Hong Kong's largest foreign exchange dealer the CBOT grain futures market showed a generally weak trend with leading commodities experiencing mixed fluctuations. The market was caught in a short-term game amid a mix of macro and fundamental factors. Data shows significant declines in U.S. wheat, soybeans, corn, and soybean oil, while soybean meal reversed the trend and closed higher. Analysts pointed out that extreme weather in Argentina, a weaker dollar, adjustments in fund positions, and comments on tariffs by Trump collectively dominated this round of price fluctuations.

Wheat: Short-term Support Remains, Long-term Upside Limited

The main contract for U.S. wheat futures reported at $5.452 per bushel, a decline of 0.73%. Funds have increased wheat net long positions by 10,500 contracts in the past 5 days, providing short-term support from a downgrade in U.S. crop ratings and the Russia-Ukraine situation. However, weakening basis and poor export expectations indicate weak spot demand. USDA data shows the 2024/25 wheat export net sales may range from -20 to 10 thousand tons. Technically, key resistance remains near $5.60 per bushel, suggesting a short-term oscillation with an upward bias.

Soybeans: Weather Disruption in Argentina Boosts Prices, Short-Covering Fuels Rebound

The main soybeans contract reported at $10.532 per bushel, down 0.89%. Funds have increased short positions by 8,000 contracts but turned net short 16,000 contracts over the past 5 trading days, indicating market confidence fluctuations. Flooding in Argentina had previously boosted prices due to reduced production expectations, but forecasts of future dry weather may alleviate this upward momentum. CIF basis shows steady spot demand, but if USDA export data or weather expectations weaken, soybean prices may still face downward risks.

Soybean Oil: Supply Pressure Dominates, Prices Drop Significantly

Soybean oil futures plunged nearly 4%, closing at 47.99 cents per pound. Despite a 30-day net long position increase of 30,500 contracts indicating a long-term bullish stance, the short-term market is evidently suppressed by rising domestic and international supply. A surge in spot trading volume and weaker basis reflect market caution regarding demand. The concentrated arrival of South American soybeans and increased domestic processing volumes further pressure soybean oil, potentially testing the 46.50 cents per pound support in the medium term.

Soybean Meal: Low Price Stimulates Rebound, Market Sentiment is Cautious

Soybean meal futures rose 0.65% against the trend, with the main contract performing steadily. Domestic spot prices are thought to be within a value repair range, and although trading activity has declined, basis quotes reflect undervalued support. Argentine weather and U.S. soybean clearance issues provide the market with temporary benefits, but in the long term, South American supply and domestic processing pressures remain limiting factors. Prices are expected to consolidate in the 2,850 to 3,000 yuan/ton range.

Corn: Tight Global Stock Expectations Drive Rebound

The main corn contract reported at $4.586 per bushel, a decrease of 0.49%. Funds increased short-term positions by 5,000 contracts, reflecting a resurgence of bullish short-term sentiment. The market benefits from expectations that the 2025/26 global stock-to-use ratio may fall to recent lows, combined with favorable U.S. Midwest weather boosting planting progress, providing price support. A strengthening CIF basis, with USDA export sales expected to reach 1.6 million tons, indicates robust export momentum. Prices may oscillate in the 4.60 to 4.80 dollars per bushel range in the short term.

Market Outlook: Mixed Influences Suggest Continued Volatility

Overall, the CBOT grain futures market is in a complex environment of intertwined macro and fundamental factors. Extreme weather in Argentina, the dollar's devaluation, changes in fund holdings, and geopolitical risks collectively drive market volatility. In the short term:

• Wheat faces resistance at highs but is supported by short-covering;
  
• Soybean and soybean oil trends diverge, with the former reliant on South American weather developments, and the latter significantly pressured;
  
• Soybean meal is in a low-level recovery phase;
  
• Corn may gain upward momentum due to tightening global supply and demand.
  

Subsequent attention needs to focus on USDA weekly export sales data, U.S. Midwest weather dynamics, and the evolution of the Russia-Ukraine situation to determine whether the market will break out of the oscillation pattern and enter a new trend cycle.

Risk Warning and Disclaimer

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.

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