By Kirk Maltais

--Wheat for September delivery fell 1% to $7.17 1/4 a bushel on the Chicago Board of Trade Wednesday with rainfall expected to hit drought areas in the latter-half of the week going into the weekend.

--Corn for December delivery fell 0.9% to $5.46 3/4 a bushel.

--Soybeans for September delivery rose 0.5% to $13.25 3/4 a bushel.

HIGHLIGHTS

Correction Course: The expectation of rainfall arriving to parched U.S. growing areas later this week helped pressure corn and wheat futures Wednesday. For wheat in particular, the outlook for rainfall arriving to areas where crop conditions are suffering due to drought is a force causing futures to correct from last week's run-up to levels last seen in May. "We seem to have past the point at which the market cares about spring wheat, and in many instances in the past, when we have had yield problems, the market tends to top out early in the summer, and then let the cash markets do the work down the road," said Charlie Sernatinger of ED&F Man Capital.

Stock Stress: Grain futures found some support from StoneX's initial estimates for 2021 crop yields - putting its estimate for corn yields at 176.9 bushels per acre and soybean yields at 50 bushels per acre, both lower than the USDA's current estimates. "The totals were under trade whispers and if true, suggest tightening US 2021/22 end stock profiles," said AgResource. The USDA will update its figures in next week's WASDE report, and other groups will be issuing their own yield estimates throughout the month.

Attention Shift: While weather continues to be a main focus for grains traders on a day-to-day basis, much of their attention is shifting towards next week's monthly WASDE report from the USDA. "We are now just a week away from the August WASDE report and that is quickly becoming a focal point of the market," said Karl Setzer of AgriVisor. "There are several analysts who believe the U.S. corn yield will be lowered in this release given the adverse weather the crop has been subjected to... as always, the question now becomes if the good regions are going to be enough to make up for losses in other regions."

INSIGHTS

Shrinking Supplies: Daily production and inventories of U.S. ethanol fell back in the past week, according to data from the EIA. In its weekly report released Wednesday, the EIA said daily production of ethanol for the week ended July 30 fell 1,000 barrels per day to 1.013 million barrels per day. It's the lowest daily ethanol production has been since late May. Meanwhile, inventories also declined, falling 84,000 barrels to 22.65 million barrels. Analysts surveyed by Dow Jones this week had forecast production to total anywhere from 1 million barrels per day to 1.03 million barrels per day. For stocks, analysts had forecasted them to rise to as high as 22.93 million barrels.

Room for Improvement: Export sales of U.S. corn - which have been showing growth in the amount of U.S. corn inspected for shipment to China - may post a boost in the amount of new sales reported this week, according to estimates from grains traders surveyed by The Wall Street Journal. Traders forecast sales of U.S. corn to total anywhere from 100,000 metric tons to 700,000 tons for the week ended July 29. If sales hit the high end of estimates, then it'll be an uptick from 414,100 tons reported last week. In its latest grain export inspections report Monday, the USDA said corn inspections totaled 1.38 million metric tons for the week ended July 29 - with shipments to China comprising 839,556 tons of corn, roughly double from last week.

Record Costs: The cost of fertilizer for farmers has rocketed up over 50% in Illinois over the past year, according to the University of Illinois. This uptick in prices is expected to continue in 2022, making costs the highest they've been since 2015 and nearing record prices seen in 2008. The reason for the higher prices is surging prices for fertilizer ingredients like anhydrous ammonia, diammonium phosphate and potash. For farmers, higher input costs affect their decisions on what to plant - a key question when looking at tight supplies for row crops like corn, wheat, and soybeans.

 
AHEAD

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

--Beyond Meat Inc. will release its second-quarter earnings report after the stock market closes Thursday.

--Corteva Inc. will release its second-quarter earnings report after the stock market closes Thursday.

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

(END) Dow Jones Newswires

August 04, 2021 15:12 ET (19:12 GMT)

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