Wheat Climbs on Speculation Russia May Restrict Exports -- Daily Grain Highlights
September 22 2021 - 3:53PM
Dow Jones News
By Kirk Maltais
--Wheat for December delivery rose 2.3% to $7.05 3/4 a bushel on
the Chicago Board of Trade Wednesday as traders mulled the
possibility that Russia may institute new restrictions on its grain
exporting.
--Corn for December delivery rose 1.6% to $5.25 1/2 a
bushel.
--Soybeans for November delivery rose 0.7% to $12.82 3/4 a
bushel.
HIGHLIGHTS
Russian Roulette: Wheat futures have reversed from yesterday's
fund selloff. Rumors of further Russian limits to their wheat
exports boosted prices. "No confirmation is offered, but this would
drop 2021/22 Russian wheat exports below 30 million metric tons,"
said AgResource. "Russian legislation allows for the tax and quotas
should Russian wheat stocks/supplies be deemed as too limited." In
its most recent WASDE report, the USDA forecast Russian exports at
35 million metric tons.
Waiting on the Sidelines: Grain futures as a whole turned higher
Wednesday, but traders said that general movement of futures is
limited with harvesting still in its early days in the U.S. "It's
hard to believe any buyers will aggressively chase the market
higher as harvest is just getting started," said Doug Bergman of
RCM Alternatives. According to the USDA's latest crop progress
report released Monday, U.S. corn harvest is at 10% complete this
week, up from a 4-year average of 9% while the soybean harvest is
6% complete, the same as the 4-year average.
More At Ease: Also pushing grains higher Wednesday was an easing
of the general commodity complex's concerns about a potential
default of China's Evergrande Group. "We're still relatively
sanguine about the risk that Evergrande's collapse triggers a
financial crisis or economic crash in China," said Mark Williams of
Capital Economics. "The company's equity may be worth next to
nothing. But policymakers will use their control of the banking
system to prevent financial strains spreading beyond
highly-leveraged developers." For grains, traders have debated
whether or not fallout from such a failure would impact China's
appetite for U.S. agricultural exports.
INSIGHTS
Streak Snapped: After declining for seven straight weeks, U.S.
ethanol inventories were reported higher by the EIA this week. In
its report released Wednesday, the EIA said that U.S. ethanol
stockpiles totaled 20.11 million barrels, up 101,000 barrels from
last week. Analysts surveyed by Dow Jones had forecast stockpiles
to fall to as low as 19.51 million barrels. Meanwhile, daily
ethanol production fell 11,000 barrels per day, to 926,000 barrels
per day. Analysts had forecast production to rise as high as
952,000 barrels per day. While this week's results defied analyst
expectations, grains traders are thinking the data will reverse
course in the coming weeks. "With ethanol margins improving due to
energies rallying and corn prices dropping, we look for a good
recovery in production over the next few weeks," said Terry Reilly
of Futures International.
Riding For a Fall: Export sales of U.S. soybeans are expected to
decline this week, according to grain traders surveyed by The Wall
Street Journal. For the week ended September 16, traders estimate
soybean sales to total anywhere from 400,000 metric tons to 1.2
million tons - which would be below last week's figure of 1.27
million tons. The decline comes amid a slowdown in the volume of
flash sales to China announced by the USDA in the past week.
AHEAD:
--The USDA will release its weekly export sales report at 8:30
a.m. ET Thursday.
--The USDA will release its monthly livestock slaughter report
at 3 p.m. ET Thursday.
--The USDA will release its quarterly hogs and pigs report at 3
p.m. ET Friday.
--The USDA will release its monthly Cattle on Feed report at 3
p.m. ET Friday.
--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
September 22, 2021 15:38 ET (19:38 GMT)
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