Wheat Futures Drop as Winter Crop Presses On -- Daily Grain Highlights
16 January 2024 - 8:31PM
Dow Jones News
By Kirk Maltais
-Wheat for March delivery fell 2.4% to $5.82 1/4 a bushel, on
the Chicago Board of Trade on Tuesday, with snowfall in growing
areas insulating the winter wheat crop from fatally cold
temperatures.
-Corn for March delivery fell 0.8% to $4.43 3/4 a bushel.
-Soybeans for March delivery rose 0.3% to $12.28 1/4 a
bushel.
HIGHLIGHTS
Limited Exposure: The arctic vortex that brought subzero
temperatures to the central U.S. growing areas looks to have caused
only limited damage -- with existing snow cover insulating wheat
crops, agricultural research firm DTN said. Even so, some areas in
the Plains and Midwest remain at risk for winterkill, according to
the firm. "Much of the winter wheat crop is covered by recent snow,
but much of Oklahoma and Texas have been uncovered and are more
susceptible to winterkill," DTN said, adding that other areas in
the Midwest also are lacking snow cover.
Maintaining the Trend: Friday's WASDE report showed
higher-than-expected production and stocks for U.S.
crops--particularly corn - which continued to pressure grains
today. "It was hard to find something fundamentally supportive in
Friday's reports with widespread USDA's revisions that were mostly
negative," said Tomm Pfitzenmaier of Summit Commodity Brokerage in
a note. Also pressuring corn was a higher U.S. dollar.
Managing Expectations: Soybeans received limited support today
from dropping production estimates in Brazil. "Brazilian soy
estimates continue to fall but most would argue those moves are
priced in," Matt Zeller of StoneX said in a note. In its latest
forecast, consultancy AgRural cut its projection for soybeans by
roughly 9 million metric tons, to just above 150 million tons. Even
so, Zeller added that forecasts for weather in Brazil continue to
project more beneficial rains ahead.
INSIGHT
Losing Streak: Exports of wheat out of Russia fell for a third
consecutive month, Andrey Sizov of SovEcon said in a note. SovEcon
forecasted that last month's export sales fell below the 3.9
million metric ton-mark Russia hit the previous month. The lack of
competitiveness of Russian wheat prices appear to be a signal for
prices around the world to move lower. "The competitiveness of
Russian wheat compared to European suppliers has diminished," the
firm said. "Efforts by the Russian government to regulate wheat
prices might be influencing its global market competitiveness."
French wheat is cheaper currently, SovEcon said.
Adding Shorts: Friday's CFTC Commitment of Traders report showed
an uptick in fund traders entering into short positions for grains
across the board, with lower prices expected after
better-than-expected supply metrics for U.S. grains in the WASDE
report. While the CFTC report is lagging, covering trading up to
Jan. 9, the trader mentality surrounding these futures looks to be
little changed -- with WASDE data exacerbating the selling
pressure. With larger short positions, a sudden influx of news
could spark a rash of short-covering sending prices up.
AHEAD
-The EIA will release its weekly ethanol production and stocks
report at 11 a.m. ET Thursday.
-The USDA will release its weekly export sales report at 8:30
a.m. ET Friday.
-The USDA will release its monthly Cattle on Feed report at 3
p.m. ET Friday.
-The CFTC will release its weekly Commitment of Traders report
at 3:30 p.m. ET Friday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
January 16, 2024 15:16 ET (20:16 GMT)
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