Chicago Board of Trade Market News Outlook

CBOT Futures Update: Bottoming Action Continues

Bottoming action persists in CBOT futures this week as prices oscillate sideways to higher. The downtrend observed since October 2023 remains a significant resistance factor for the May corn contract, ranging between $4.45 and $4.50 per bushel. Overcoming this resistance could signal the development of an intermediate uptrend, potentially propelling prices towards the $4.60 level initially, and ultimately towards stronger resistance between $4.85 and $5.05 per bushel. Notably, Thursday’s trade session witnessed the market piercing through the trendline to the upside.

EU Import Duties on Russian Grain Under Consideration

Reports indicate that the European Union (EU) is contemplating imposing import duties on Russian grain imports to address farmer protests. Proposed duties range between $95 and $104 euros per metric ton. While Russian grain imports into the EU are currently modest, it is Ukrainian grain that is the focal point of protests. Doubts remain regarding the imposition of similar duties on Ukrainian grain imports by Brussels. The EU farmer protests are expected to persist until duty mechanisms are implemented to curtail grain flow from Ukraine.

China Approves Additional GMO Seed Traits

China has approved 27 new GMO seed traits for future planting, aimed at enhancing domestic corn and soybean yields. However, the immediate impact on 2024 GMO seed availability is expected to be minimal, as it will take time for Chinese farmers to adopt the new seed technology fully.

Federal Reserve Maintains Interest Rates

Following its two-day monetary policy meeting, the Federal Reserve kept interest rates steady at 5.25% to 5.50%. Projections suggest that rates would likely end 2024 at 4.50% to 4.75%, equivalent to three 25 basis point cuts. The Fed’s upgraded gross domestic product projections for 2024 indicate a 2.1% expansion, with inflation projected at 2.4% by year-end. Grain markets reacted positively to this news, anticipating support for asset prices, including commodities.

Developments in the U.S. Farm Bill

In U.S. farm bill news, the House is expected to introduce a proposal by late May, with potential action in June. Key proposals include significant funding boosts for the Market Access Program (MAP) and Foreign Market Development Program (FMD). The U.S. agricultural sector seeks over $900 million in aid to regain overseas markets lost to competitors like Brazil and Russia. The Regional Agricultural Promotion Program (RAPP), totaling $1.3 billion, aims to diversify markets, with a focus on expanding into Southeast Asia, the Middle East, and Africa. The U.S. aims to leverage the growing middle class and increased buying power in these regions.

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