By Kirk Maltais

--Wheat for December delivery fell 0.7% to $6.15 3/4 a bushel, on the Chicago Board of Trade Tuesday, dropping for a second straight day as grains traders were cautious in trading ahead of next week's U.S. general election.

--Soybeans for January delivery fell 0.6% to $10.76 1/2 a bushel.

--Corn for December delivery fell 0.4% to $4.16 a bushel.

HIGHLIGHTS

Treading With Caution: Grains futures on the CBOT finished lower Tuesday. Traders took a cautious approach toward commodities ahead of next weeks' presidential election. "There is an 'air' of correction in the marketplace," AgResource said. "The risk vs. reward amid improving South American, U.S. and Black Sea weather forecasts is not there with a major US election in a week." The caution has extended to the equities markets The Dow Jones Industrial Average fell 0.5% in late afternoon trading.

Closing In: The U.S. harvest for corn and soybeans is solidly ahead of the usual 5-year pace, the USDA said in its crop progress report released yesterday - pegging the corn harvest at 72% finished and soybean harvest at 83% done. "These are both at levels where trade will quickly put the year to rest and focus instead on what will be done with the new inventory," said Karl Setzer of AgriVisor. The progression of the harvest put pressure on CBOT futures Tuesday.

INSIGHTS

Applying the Brakes: U.S. ethanol production and inventories are expected to drop again this week, said Terry Reilly of Futures International. Futures International forecasts ethanol production to drop 6,000 barrels per day to 907,000 barrels per day, which would be the lowest they've been since mid-September. Meanwhile, the firm forecasts ethanol inventories to fall 100,000 barrels to 300,000 barrels -- which could potentially put ethanol inventories at their lowest levels since December 2016. An inventory drop combined with higher production would be a hopeful sign for grains traders looking to see U.S. ethanol rebound in domestic demand.

Staying Elevated: Palm oil prices will likely ease slightly over the coming months but remain somewhat elevated, said Fitch Solutions in a note. The firm forecasts that palm oil will average MYR2,580 a metric ton as it assumes that it will remain above MYR2,600 for the rest of the year. It says global production will recover strongly in 2020-2021, economic activity will be stronger in 2021, along with restaurant sales and fuel use, which will support palm oil consumption; "The continued recovery in palm oil imports from India and China and robust biodiesel production in Indonesia will keep prices supported next year." Palm oil prices have been a main driver for higher U.S. soybean futures.

AHEAD:

--Kellogg Co. will release third-quarter earnings before the stock market opens on Wednesday.

--The EIA releases its weekly update on ethanol production and inventories at 10:30 a.m. ET Wednesday.

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

--Archer Daniels Midland will release third-quarter earnings after the stock market closes on Thursday.

Lucy Craymer contributed to this article.

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

(END) Dow Jones Newswires

October 27, 2020 15:44 ET (19:44 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.