By Kirk Maltais

--Wheat for May delivery rose 2.5% to $6.66 1/4 a bushel on the Chicago Board of Trade Tuesday amid indications of tighter world wheat supplies.

--Soybeans for May delivery rose 1.5% to $14.12 1/2 a bushel.

--Corn for May delivery rose 1.3% to $5.45 a bushel.

HIGHLIGHTS

Short Down Under: Wheat futures led the way higher Tuesday following word that Australia is forecasting a 25% decline in wheat output in 2021/22. Meanwhile, soybean and corn futures also finished on the plus side even though both started lower in the pre-market as speculative money moved out of big long positions.

Weather Warnings: The weather outlook for South America took a turn for the worse, which helped grain futures turnaround in U.S. trading and close the day higher. The weather in Brazil is expected to be wetter in some areas, while dryer in Argentina -- both of which are bad for crops there. "Soybeans rallied on harvest delays [in] Brazil [for the] next 2 weeks," said Jim Roemer of Best Weather Inc., adding that the dry weather in Argentina comes "at this critical time."

INSIGHTS

Warming Up: U.S. ethanol production is expected to rebound this week as the country recovers from the Midwest deep freeze last month. Analysts informally surveyed by Dow Jones pegged production anywhere from 688,000 barrels per day to 890,000 barrels per day, which would be an improvement from 658,000 barrels per day reported last week by the EIA. Meanwhile, analysts surveyed believe that ethanol inventories will drop in this week's report down to anywhere from 22.25 million barrels to 22.685 million barrels, from 22.785 million barrels last week.

Watch WASDE: March's monthly WASDE report isn't usually seen as a big mover of CBOT grain futures, but this report could buck that trend, said Arlan Suderman of StoneX. "It matters a lot more when stocks are tight, when relatively small adjustments to the balance sheet can cause a more significant price response," said Mr. Suderman. "Traders will be looking for changes in Argentine and Brazilian corn and soybean production estimates, as well as U.S. export targets for the two commodities," he added.

Dimming Outlook: While U.S. farmers see current market conditions as supportive for agriculture, that optimism is increasingly starting to fade looking to the next marketing year. According to a survey conducted jointly by Purdue University and the CME Group, an index tracking farmer's future expectations dropped 20% since hitting an October high. "Concerns about possible policy changes affecting agriculture, and eroding confidence in future growth in ag trade, continue to weigh on producers' future expectations," said James Mintert, director of Purdue University's center for commercial agriculture.

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.

--USDA and Statistics Canada release its biannual reports on cattle, sheep, and hog herds at 3 p.m. ET Thursday.

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

(END) Dow Jones Newswires

March 02, 2021 15:47 ET (20:47 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.