Corn Futures Slide as Strong Planting Weather Mulled
March 03 2021 - 4:10PM
Dow Jones News
By Kirk Maltais
--Corn for May delivery fell 1.8% to $5.35 1/4 a bushel on the
Chicago Board of Trade on Wednesday, with grains traders
anticipating good spring weather ahead enabling a large planting
season for U.S. corn.
--Wheat for May delivery fell 1.5% to $6.56 a bushel.
--Soybeans for May delivery fell 0.4% to $14.07 1/4 a
bushel.
HIGHLIGHTS
All Systems Go: "Corn was down ... on talk of good early
planting weather and lack of fresh export demand, plus lower
Argentine export premiums," said Charlie Sernatinger of ED&F
Man Capital. A record 182 million acres of corn and soybeans is
expected to be planted by farmers this year, although the USDA will
update this figure with its Prospective Plantings report at the end
of the month.
No Direction: Outside of the weather, traders were largely
unable to find direction in the market. "Values have been
back-and-forth in recent weeks with a lack of resting orders
creating 'air pockets' for price," AgResource said.
INSIGHT
Finding Normalcy: After thawing from a deep freeze in previous
weeks, U.S. ethanol production has climbed back - rising to 849,000
barrels per day last week, according to the EIA. That's up from
658,000 barrels per day in the previous week, which was the lowest
level since the Covid-19 pandemic first hit ethanol production last
year. The uptick was more than expected by market participants
informally surveyed by Dow Jones, but still puts U.S. ethanol
production at a less-than-optimal position. "At 849,000 barrels per
day week ending February 26, this will not favor USDA's 4.950
billion bushel corn usage unless we see [over] 925,000 [barrels]
per day rebound by mid-March," said Terry Reilly of Futures
International. Inventories, meanwhile, fell 360,000 barrels to 22.4
million barrels.
Keeping Things Muted: Export sales of U.S. grains are expected
to stay low this week, according to grains traders surveyed by The
Wall Street Journal. Corn exports are expected to lead the way this
week, totaling anywhere from 500,000 metric tons to 1.05 million
tons. Soybeans are expected to be at 200,000 tons to 700,000 tons,
while wheat is expected to be at 100,000 tons to 500,000 tons. The
low end of all three grains is roughly where sales totaled last
week -- which were considered low among traders and seen as
evidence of demand rationing taking place.
Fundamental Focus: China's appetite for U.S. grain exports isn't
expected to evaporate any time soon, said Ray Young, executive vice
president of Archer Daniels Midland. Speaking on a virtual
conference hosted by Bank of America, Mr. Young said the company
sees China's appetite for U.S. soybeans and corn as being based on
need to use the commodities, not just simply stockpile them. "I
think the reason China is buying agricultural products throughout
the world is fundamental demand," said Mr. Young, calling China's
appetite a medium-term trend. The reason, Mr. Young said, is
because China has escaped the throes of the Covid-19 pandemic while
areas like the U.S. still grapple with it.
AHEAD:
--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.
--The CFTC will release 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
March 03, 2021 15:55 ET (20:55 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.