Wheat Futures Slide as Exports Stay Uncompetitive -- Daily Grain Highlights
06 February 2023 - 9:23PM
Dow Jones News
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)
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