Wheat Falls on Higher U.S. Dollar -- Daily Grain Highlights
23 September 2022 - 8:54PM
Dow Jones News
By Kirk Maltais
-- Wheat for December delivery fell 3.7% to $8.83 1/2 a bushel
on the Chicago Board of Trade Friday, with traders taking a
risk-off approach to grains and markets in general in reaction to
rising interest rates as well as a new 20-year high on the USD
index.
-- Soybeans for November delivery fell 2.1% to $14.25 a
bushel.
-- Corn for December delivery fell 1.9% to $6.79 a bushel.
HIGHLIGHTS
Hands-Off Approach: Grain futures trading on the CBOT fell
Friday as wider markets continued to digest the Federal Reserve's
75 basis-point hike earlier this week, along with other central
banks around the world raising rates.
"The weakening price trend since the U.S. central bank raised
its lending rate ... continues to hold a bearish sway across a host
of asset classes -- including CBOT grain futures," said AgResource
in a note.
A strong U.S. dollar also pressured grains. The ICE index
continued to rise, to its highest point in more than 20 years by
climbing 1.5% Friday.
Rising Tide: Projections on the size of the Russian wheat crop
continue to grow, which weighed on CBOT wheat futures.
Russian firm IKAR is now projecting the Russian wheat crop at
100 million metric tons, up from 97 million tons. Its estimate
joins others that have increased their outlook, including SovEcon
and the USDA in its last WASDE report.
The higher projections are pushing down wheat futures.
"Wheat is lower on extremely large Russian wheat production
estimates and a fresh 20-year high in the USD," said Terry Reilly
of Futures International in a note.
INSIGHTS
Rain Check: A La NiƱa climate that is expected to continue
through the rest of the year appears to be supportive for corn and
soybean crops being planted in Brazil with increased rainfall
expected in those areas, Marex said in a note.
"Our rainfall outlook points to wetter conditions over Central
Brazil," the firm said. "This includes over grain regions in Mato
Grosso where a timely start to the rainy season will be important
for the planting of soybeans and corn."
The strength of Brazilian crops is of interest to U.S. traders
to see how much competition comes into the market.
Putin Potential: With a new round of military mobilization,
traders are closely watching the rhetoric of Russian President
Vladimir Putin to see if he signals any fresh challenges to the
Black Sea grain export corridor.
While wheat shed value Friday, it may see more runups like the
7.6% surge earlier this week.
"The risk, however, is still to the upside, as there is no end
to the ways that Putin can screw up the Black Sea wheat trade,"
said Charlie Sernatinger of ED&F Man Capital in a note.
AHEAD
-- The USDA is scheduled to release its weekly grains export
inspections report at 11 a.m. EDT Monday.
-- The USDA is due to release its weekly crop progress report at
4 p.m. EDT Monday.
-- Cal-Maine Foods Inc. is scheduled to release its
first-quarter earnings report after the stock market opens
Tuesday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
September 23, 2022 15:39 ET (19:39 GMT)
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