By Kirk Maltais

--Wheat for September delivery rose 1.7% to $5.25 a bushel on the Chicago Board of Trade Thursday, as grains traders maintained a focus on a heatwave that could potentially damage wheat crops in the U.S. and abroad.

--Corn for December delivery rose 0.8% to $3.57 a bushel.

--Soybeans for November delivery rose 0.5% to $9.01 1/2 a bushel.

HIGHLIGHTS

Can't Take The Heat: The grains market continued to focus on potential hot weather affecting major crop-growing areas, possibly inflicting crop damage. "Back to trading a weather market. Weather models look warmer and drier," said Terry Reilly of Futures International. Agricultural weather firm DTN is forecasting scattered and isolated rainfall in the Midwest and northern plains through the weekend, with temperatures at or above normal. If rainfall fails to appear, then hot temperatures could damage the growing crops.

Wheat Worldview: Wheat led grains higher Thursday. Traders fixated on the weather in both the U.S. and other wheat-growing nations like Russia. However, how long shrinking harvest estimates can continue remains to be seen. "It's not like we are running out of wheat," said Charlie Sernatinger of ED&F Man Capital. "What the market is trying to tell us is that going into a government report, with the spring grains looking at disturbing weather, we just have too many shorts."

Chinese Appetite: Grain export sales released by the USDA this morning exceeded forecasts provided to The Wall Street Journal by traders. Chinese buying boosted totals for corn and soybeans. Corn sales for both marketing years totaled 1.01 million metric tons, while soybean sales totaled 1.33 million tons. Chinese buying for corn totaled 407,200 tons in the 2019/20 marketing year and 653,400 tons of soybeans across both marketing years.

INSIGHTS

Balancing Out: Grain analysts are forecasting tomorrow's WASDE report to show that even though planted acreage of corn and soybeans by U.S. farmers is lower than previously expected, higher yields will keep grain production high. Analysts surveyed by The Wall Street Journal this week say that they expect corn production to total 15.06 billion bushels, down nearly 1 billion bushels from the USDA's estimate last month. Meanwhile, soybean production is expected to rise to 4.17 billion bushels from 4.13 billion bushels in June. In both cases, crop yields forecasts are expected to be higher, which is mitigating the decrease in planted acreage reported by the USDA last month.

Bellies of the Beasts: The USDA's stockpile estimates for grains could be most largely affected by how the USDA perceives the U.S. livestock industry recovering through the rest of the year. If the USDA sees feed grain usage rising into 2021, then stockpiles could decline more than expected. "One key to watch will be whether USDA reduces both old- and new-crop corn feed usage," said Arlan Suderman of StoneX. "It's new-crop feed usage estimate is pretty aggressive, and the stocks report adds evidence of such." Livestock supplies have remained high through the coronavirus pandemic as meatpacking plants work through a glut in animal supplies.

Mother Nature Rules: The focus of grains traders all this week has been with weather in the Midwest, and the USDA's WASDE report isn't likely to divert trader attention for too long. "Market attention will revert back to weather unless figures are way off expectations and even then Mother Nature is still king right now," said Joel Karlin of Western Milling.

AHEAD:

--The USDA will release its monthly WASDE report at noon ET Friday.

--The CFTC releases its weekly commitment of traders report at 3:30 p.m. ET Friday.

--The USDA releases its weekly grain export inspections data at 11 a.m. ET Monday.

--The USDA releases its weekly crop progress report for the 2020/21 crop at 4 p.m. ET Monday.

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

(END) Dow Jones Newswires

July 09, 2020 16:07 ET (20:07 GMT)

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