Wheat Drops as Larger Russian Export Quota Mulled
December 01 2020 - 4:03PM
Dow Jones News
By Kirk Maltais
--Wheat for March delivery fell 1.3% to $5.77 1/4 a bushel on
the Chicago Board of Trade Tuesday as traders considered how a
larger-than-expected Russian quota of wheat exports will affect the
market.
--Corn for March delivery fell 1.2% to $4.20 3/4 a bushel.
--Soybeans for January delivery fell 0.6% to $11.62 a
bushel.
HIGHLIGHTS
Bear Hug: Wheat futures trading on the CBOT led the way lower
for row crops Tuesday. Egypt's buying authority purchased 170,000
metric tons of Russian and Ukrainian wheat at an average price of
$262 per ton -- which is virtually unchanged from previous weeks.
As a result, trading has focused more on already-known bearish news
like a larger Russian export quota and a bigger-than-expected
Australian crop. "U.S. and world wheat futures this week have been
hit by a flood of bearish input," said AgResource.
Soaking It Up: After rainfall this weekend, reports of further
precipitation expected in Brazil pressured grains, specifically
corn and soybeans. "Corn tried the upside early in the day on short
covering, but couldn't hold the rally," said Charlie Sernatinger of
ED&F Man Capital. Showers with temperatures near or above
normal are expected in both the Rio Grande do Sul and Mato Grosso
regions of Brazil, said DTN.
INSIGHTS
Risky Bets?: The latest commitment of traders report, released
yesterday by the CFTC, showed a net long among managed money
traders at over 266,000 contracts for corn and over 195,000
contracts for soybeans. With such sizable long positions in these
grains, bearish news could potentially spark a major sell-off.
Would that mean the love affair for beans is over? "It is probably
premature to state that as a fact... but for now, it would appear
[trader] attention has turned elsewhere," said Dan Hueber of the
Hueber Report.
Optimism Wilts: The Purdue University/CME Group Ag Economy
Barometer -- a measurement of farmer optimism about the
agricultural economy -- fell 16 points in November to a reading of
167, falling off of an all-time high set in October. "Producers
were more pessimistic about future economic conditions on their
farms in November than they were just a month earlier," said James
Mintert, the barometer's principal investigator and director of
Purdue University's Center for Commercial Agriculture. "This is the
opposite of what happened following the November 2016 election."
According to Mr. Mintert, farmers say that they expect to see
higher regulations and a weaker safety net for US farmers, driving
sentiment lower amid the election of President-elect Joe Biden in
November.
AHEAD:
--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.
--The CFTC releases 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 01, 2020 15:48 ET (20:48 GMT)
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