Wheat Futures Fall On Supply Growth Signals

By Kirk Maltais

--Wheat for December delivery fell 1.6% to $5.49 a bushel on the Chicago Board of Trade on Wednesday following indications that the planting of winter wheat in the U.S. is ahead of schedule.

--Soybeans for November delivery fell 0.5% to $10.14 1/2 a bushel.

--Corn for December delivery fell 0.2% to $3.68 1/2 a bushel.

HIGHLIGHTS

Gathering Strength: Traders expect U.S. winter wheat planting to hit the ground running. The weather has been dry, so farmers have been able to easily get out to their fields. In its last crop progress report, the USDA estimated that 20% of the crop has been planted, up from the five-year average of 19%.

Russia, Russia, Russia: Egypt's state grain authority bought 405,000 metric tons of Russian wheat late Tuesday. It's the third time this month the General Authority for Supply Commodities has bought Russian wheat, which has been the cheapest on offer. "With the Black Sea dominating the global market, U.S. wheat exports are not as strong as they could be, especially to nontraditional importing countries," said Terry Reilly of Futures International.

Winning Streak: China is again a major buyer of U.S. soybean exports, with the USDA confirming Wednesday that another 132,000 metric tons of soybeans have been sold to China, as well as 126,000 tons of soybeans to unknown destinations. Sales have been announced every day this week and for the majority of days this month. Even so, traders appear to be focusing more on supply concerns, bringing soybean futures down overnight.

Piling Up: Ethanol inventories rose by 199,000 barrels last week, while production fell by 20,000 barrels a day, according to EIA data. This could signal a backsliding in the ethanol industry's recovery from the Covid-19 pandemic, which would weigh on demand for corn. "The corn market may very well have formed a high for now without new bullish news," said Tomm Pfitzenmaier of Summit Commodity Brokerage.

INSIGHT

Bipolar: Grains futures presented a tale of two markets, according to AgResource. "The bulls will want to talk [about] another week of large U.S. export sale on Thursday, while the bears point to the ongoing Midwest harvest and better than expected corn yield data," the firm said. Thursday's weekly export sales data from the U.S. may divert more attention to demand, but only if the results reported are stronger than anticipated.

Steady Tonnage: Grains traders surveyed by The Wall Street Journal on Wednesday expect export sales of grains to stay largely consistent with last week's sales total. Most notably, corn export sales are expected to range from 1.05 million metric tons to 1.8 million tons, while soybeans are expected to total between 1.6 million tons and 3 million tons. If the actual totals are anywhere close to the previous week's figures, then export sales could end up on the high side of those estimates, boosting CBOT grain futures.

Oil Slick: Palm oil prices ended the Asian trading session lower for the third consecutive day, partly due to profit-taking pressure. The vegetable oil hit its highest level since January earlier this month, but prices have since eased. Expectations of higher production levels in September might have also triggered concerns over supply-demand dynamics and weighed on prices, said one Kuala Lumpur-based analyst. Worries about a resurgence of Covid-19 cases in Europe further damped sentiment, he said.

AHEAD

--The USDA will release its latest weekly export sales numbers at 8:30 a.m. ET Thursday.

--The USDA releases its quarterly hogs and pigs report at 3 p.m. ET Thursday.

--The USDA will release its monthly cattle on feed report at 3 p.m. ET Friday.

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

Yifan Wang contributed to this article.

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

(END) Dow Jones Newswires

September 23, 2020 15:58 ET (19:58 GMT)