Wheat Tumbles on View That U.S. Exports are Uncompetitive -- Daily Grain Highlights
05 December 2022 - 8:21PM
Dow Jones News
By Kirk Maltais
-- Wheat for March delivery fell 2.8%, to $7.40 a bushel on the
Chicago Board of Trade on Monday as traders viewed U.S. prices as
too high to compete globally.
-- Corn for March delivery fell 0.9%, to $6.40 1/2 a bushel.
-- Soybeans for January delivery rose 0.1% to $14.40 a
bushel.
HIGHLIGHTS
Falling Knife: Grain traders are generally holding back from
CBOT wheat futures, and even with the continuous contract finding
its lowest level in over a year traders are uninterested in
bargain-hunting. "U.S. wheat is not competitive on the world stage,
and at this time of year, no one is interested in trying to grab a
falling knife," Dan Hueber of the Hueber Report told the WSJ.
Most-active wheat futures have shed roughly 13% in the past
month.
Weather Watch: While corn and wheat futures on the CBOT finished
lower, soybeans closed higher. For soybeans, a factor lifting
futures is dry weather seen in South America, particularly
Argentina - where rainfall expectations this week are limited and
temperatures are well above normal for this time of year, according
to a weather forecast from DTN. "Concerns over Argentine weather is
the primary driver," Karl Setzer of Mid-Co Commodities told the
WSJ, adding that easing Covid-19 restrictions in China is also
providing a boost.
Taking Cues: Corn and wheat futures spent the day lower,
following prices in Ukraine - where a slowdown in available cargo
vessels has grains amassing in port storage. "Port facilities are
filling with grain, with fewer ships coming into harbor," said
Arlan Suderman of StoneX in a note. "A big reason for the slowdown
is Russia's slow walking of ship inspections, which backs up ships,
raising costs for shippers - that makes Ukrainian grain less
attractive to buyers."
INSIGHTS
Turn Around Potential: Traders seemed uninterested in
bargain-hunting today, but long-term fundamentals may support an
eventual uptick in prices before the end of the year. "U.S. wheat
will be closer to global prices so this may help shore up the
decline but there are plenty of fundamentals that are more long
term bullish," Virginia McGathey of McGathey Commodities told the
WSJ. "This could be a bargain for traders looking through to 2023 -
I expect the next few weeks to be exciting as everyone looks to
close the books for 2022."
Losing Streak: Open interest in agricultural futures has fallen
for a fourth consecutive week, says JPMorgan Global Commodities
Research in its latest report. The firm says that for the week
ended December 2, open interest slid $4.49 billion to $279.3
billion. That's the lowest open interest has been in agriculture in
the past two months, JPMorgan said. Open interest across all
commodities did improve, however - led by improvements in the
environmental markets as well as the metals markets.
AHEAD
-- The EIA will release its weekly ethanol production and stocks
report at 10:30 a.m. ET Wednesday.
-- The USDA will release its weekly export sales report at 8:30
a.m. ET Thursday.
-- The USDA will release its monthly world supply and demand
report at noon 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
December 05, 2022 15:06 ET (20:06 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.