Wheat Futures Higher as Short-Covering Accelerates -- Daily Grain Highlights
24 January 2024 - 8:20PM
Dow Jones News
By Kirk Maltais
-Wheat for March delivery rose 2.5% to $6.12 a bushel on the
Chicago Board of Trade on Wednesday as more traders covered their
ample short positions on grains.
-Corn for March delivery rose 1.2% to $4.52 1/4 a bushel.
-Soybeans for March delivery were unchanged at $12.39 a
bushel.
HIGHLIGHTS
Rally Cry: The large short positions in CBOT grains confirmed by
the CFTC on Friday are starting to give way to short-covering by
traders. "Prices in Chicago are seeking to recover from their sharp
fall at the beginning of last week," said AgriTel in a note. "The
slight rebound observed is mainly technical, although last Friday's
good U.S. export figures are also a source of support." The CFTC
reported that managed money funds are holding a net-short position
of roughly 260,000 contracts in corn through Jan. 16, while
combined wheat contracts are net-short by nearly 137,000 contracts
and soybeans are net-short nearly 77,000 contracts.
Shot Down: News of a Russian military plane crash close to
Ukraine also supported wheat. Russia accused Ukraine of shooting
the Ilyushin Il-76 from the sky over the Belgorod region. Traders
are mulling over the implications of what the attack will mean for
wheat exports, but added risk premium in afternoon trading.
INSIGHT
Shifting Focus: South American weather has been the main mover
for CBOT grains in recent weeks, but the focus of this attention
has shifted from Brazil to Argentina. "The Argentine weather
forecast offers limited rainfall and rising temperatures for the
next two weeks," AgResource said in a note. "Notable heat with
highs in the upper 90's to lower 100's will be felt across
Argentina early next week which will spark acute crop stress." The
lack of rainfall is expected to deplete soil moisture there,
according to DTN in a note.
Three-Year Low: The average daily production for U.S. ethanol
fell to its lowest level since February 2021, according to EIA
data. In its latest weekly report, the agency said that for the
week ended Jan. 19, daily ethanol production landed at 818,000
barrels a day. That is the lowest average production since it
landed at 658,000 barrels a day for the week ended Feb. 19, 2021.
The figure is well below the estimates of analysts surveyed by Dow
Jones this week, with analysts forecasting daily production to be
anywhere from 1.034 million barrels a day to 1.074 million barrels
a day.
Demand Potential: Export sales of U.S. soybeans are expected to
surge versus the previous week, according to analysts surveyed by
The Wall Street Journal. For the week ended Jan. 18, soybean sales
reported by the USDA are predicted to climb to as high as 1.23
million metric tons, which is up from 783,000 tons last week. Corn
sales are also forecast to exceed 1 million tons, with wheat seen
as climbing as high as 700,000 tons. The outlook for export demand
going forward has been a chief factor pressuring grain futures,
with demand seen as weak.
AHEAD
-The USDA will release its weekly export sales report at 8:30
a.m. ET Thursday.
-The USDA will release its monthly Livestock Slaughter report at
3 p.m. ET Thursday.
-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 24, 2024 15:05 ET (20:05 GMT)
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