By Kirk Maltais

--Wheat for March delivery fell 1% to $7.49 1/2 a bushel, on the Chicago Board of Trade on Monday, with traders still seeing U.S. exports as too expensive to compete with those from Russia.

--Soybeans for March delivery fell 0.7% to $15.21 a bushel.

--Corn for March delivery rose 0.1% to $6.78 a bushel.

HIGHLIGHTS

Still Steep: Wheat futures appear little moved by indications that Russia may step up its offensive in Ukraine this month, a year after fighting first began. Instead, traders focused on the strong dollar making U.S. exports even less competitive on the global stage. "Fact is, our wheat exports are at a 51-year low at 775 million [bushels] and the current pace is still lagging," Joel Karlin of Ocean State Research told the WSJ.

Letting the Air Out: Traders spent much of the day mulling over the effect from the weekend downing of a Chinese surveillance balloon by the U.S. military. "We got excited last week with the announcement of a meaningful amount of U.S. corn exports to that region; however, the Spy Balloon situation throws gasoline on the foreign policy fire," said Ken Zuckerberg of CoBank in a note. Last week, the USDA reported that 319,500 metric tons of corn were sold to China for the week ended Jan. 26.

Turning On the Faucet: Also pressuring grains were improving weather conditions for Argentina. "The country is in the midst of a dry stretch that lasts this week before showers move through again this weekend with a cold front," said agricultural research firm DTN in a note. "Some spotty showers may occur in a couple of spots this week, though rising temperatures will negate any precipitation that falls until the weekend."

INSIGHT

Southern Comfort: Grain traders will hone in on a specific geographic area in this week's WASDE report. "Focus will be on South American production with the worst drought in Argentina in 60 years expected to produce lower corn/bean production," said Doug Bergman of RCM Alternatives in a note. "The average trade guess for the report is above what many private estimates have been with the USDA expected to be conservative with their estimates."

Making Adjustments: Wednesday's WASDE report is also expected to make an adjustment to the amount of U.S. corn consumed by ethanol producers, said Charles Arbuthnot of Marex in a note. "The USDA may finally reduce corn grind for ethanol in the upcoming report, after leaving the line unchanged since October," said Mr. Arbuthnot. Marex forecasts that the USDA may cut consumption by 50 million to 60 million bushels of ethanol grind this month, cutting it another 30 million bushels in the coming months. In the January report, the USDA forecast domestic consumption of corn at 11.99 billion bushels, along with 1.93 billion bushels of exports. Both of these figures are down from the 2021/22 marketing year.

Missing the Target: Export inspections for corn are down again this week, keeping the pace for the marketing year well behind last year. The USDA said corn export inspections totaled 480,205 metric tons for the week ended February 2. That's down from 542,989 tons reported last week, and 1.07 million tons at this time last year. This week's low figure puts the pace of corn export inspections in the 2022/23 marketing year even more behind last year's - with inspections this year totaling 12.53 million tons, down nearly 33% from last year.

AHEAD

-Green Plains Inc. will release its fourth-quarter earnings report at 6:30 a.m. ET Wednesday.

-Bunge Ltd. will release its fourth-quarter earnings report before the stock market opens on Wednesday.

--The EIA will release its weekly ethanol production and stocks report at 10:30 a.m. ET Wednesday.

-The USDA will release its monthly world supply and demand report at noon ET Wednesday.

-The USDA will release its monthly world supply and demand report at noon ET Wednesday.

-Pilgrims Pride Corp. will release its fourth-quarter earnings report after the stock market closes on Wednesday.

Write to Kirk Maltais at kirk.maltais@wsj.com

(END) Dow Jones Newswires

February 06, 2023 16:08 ET (21:08 GMT)