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BofA has offered an replace on the grains and soy market, highlighting that grain import demand is weak and will not see a restoration anytime quickly.
The 2024/25 international grain demand is predicted to be feeble, with the season beginning off with disappointing import figures, particularly from China. “International corn imports took an enormous hit resulting from a dramatic decline in China imports firstly of the season that even sturdy Mexico purchases couldn’t offset,” the word from UBS stated, including that wheat demand has additional weakened resulting from import restrictions by Türkiye.
The competitors between grain-exporting nations is intensifying as the value dynamics have proven uncommon patterns this season. With US corn being the most cost effective and Argentina’s wheat costs plummeting, the implication is an amazing international provide. The Northern Hemisphere’s harvest completion is predicted to deliver much more grain availability, notably for corn.
Grain costs are shedding help as climate dangers start to fade. The markets are anticipated to stay directionless and range-bound at $5-6/bushel for wheat, with corn costs wanting bearish. The wheat-to-corn value unfold is projected to extend from $1.2/bushel to $1.7/bushel by the top of the season.
BofA maintains a bearish stance on soybeans, citing no upside catalysts. The mixture of potential document crops, lagging demand, and doable US-China commerce tensions post-elections contribute to this outlook. Moreover, the specter of La Niña affecting costs is diminishing.
When it comes to the macroeconomic outlook, BofA’s economists predict a 3.3% rise in world GDP for each 2025 and 2026.
Wheat costs are forecasted to common $5.5/bushel in 2025, with export availability from main nations anticipated to fall, resulting in intense competitors as international imports contract.
For corn, a document crop has constructed up US inventories, and costs are anticipated to common $4/bushel in 2025.
International soybean manufacturing is forecasted to hit a document 426 million tons in 2024/25, with costs averaging $9.7/bushel.
Soybean meal manufacturing is ready to outpace consumption, resulting in weak costs forecasted at $300/ton for 2025, whereas soybean oil manufacturing will increase could also be impacted by regulatory adjustments and import duties, with costs anticipated to common 39 cents/pound.
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