Wheat Falls as Traders Anticipate World Supply Growth -- Daily Grain Highlights
December 08 2021 - 3:56PM
Dow Jones News
By Kirk Maltais
-- Wheat for March delivery fell 1.7% to $7.94 1/2 a bushel on
the Chicago Board of Trade Wednesday amid forecasts that world
wheat supplies will be shown rising in Thursday's WASDE report.
-- Corn for March delivery rose 0.2% to $5.87 1/4 a bushel.
-- Soybeans for January delivery rose 0.9% to $12.61 a
bushel.
HIGHLIGHTS
World Wheat: Forecasts that a larger-than-expected wheat crop in
Australia may inflate the world balance sheet are prompting many
traders to liquidate their positions in wheat futures Wednesday
ahead of the USDA's WASDE report Thursday.
"I think there's a little concern that the Australian wheat crop
is going to be raised, that'll loosen the balance sheet," said Don
Roose of U.S. Commodities.
Analysts surveyed by The Wall Street Journal forecast the report
to show a 400,000 metric-ton increase in world wheat stocks for
2021-22, with a smaller increase expected for the old-crop
year.
Government Pressure: The EPA's new mandates for blending biofuel
into gasoline are higher than previously reported by other outlets
with The Wall Street Journal reporting the EPA will require
refiners to add 18.52 billion gallons of ethanol and other biofuels
to be blended into gasoline for 2021, down from a mandate of 20.09
billion gallon previously set for 2020.
Agency officials are also retroactively lowering the amount
required for 2020 to 17.13 billion gallons, down from the 20.09
billion-gallon target it set in late 2019.
These figures pressured futures earlier in the day, although
that pressure didn't stick throughout the full session.
High Volume: A large flash sale of U.S. corn confirmed by the
USDA Wednesday helped spur corn out of a downward trend. The USDA
announced that Mexico had purchased 1.84 million metric tons of
U.S. corn. Of that, 1.09 million tons were sold for delivery in the
2021-22 marketing year, with the remainder being sold for delivery
in 2022-23.
Movement in futures overall stayed limited though, with grains
traders tentative ahead of data from the USDA's WASDE report.
INSIGHTS
Still Profitable: Even though prices for crude oil are off
roughly $10 per barrel from levels seen last month, the blending of
ethanol remains profitable, which may boost the amount of U.S. corn
consumed by the industry.
"Cash ethanol prices have pulled back a bit lately but are still
just above the $3.00/gallon level across the entire Midwest," said
Tomm Pfitzenmaier of Summit Commodity Brokerage. "It is estimated
that plant revenues in Iowa for example are running a full $1.00
over all costs. This should give producers plenty of incentive to
continue to produce at 95-97% capacity."
In its latest weekly report, the EIA said daily production of
ethanol through Dec. 3 hit 1.09 million barrels per day, up from
1.035 million barrels per day reported last week. Ethanol
inventories also rose for the week, the EIA said.
Rising Tide: Export sales of U.S. grains are largely expected to
turn higher from the previous week's levels, according to grain
traders surveyed by The Wall Street Journal this week. Traders are
forecasting corn sales for the week ended Dec. 2 to be anywhere
from 600,000 metric tons to 1.4 million tons, soybean sales between
1 million tons and 1.7 million tons, and wheat sales between 75,000
tons to 400,000 tons.
If the actual figures come in close to the high ends forecast by
traders that will be an upturn from last week. Inspection figures
reported by the USDA on Monday were slightly lower than those from
the previous week.
AHEAD
-- Hormel Foods Corp. is scheduled to release its fourth-quarter
earnings at 6:30 a.m. EST Thursday.
-- The USDA is due to release its weekly export sales report at
8:30 a.m. EST Thursday.
-- The USDA is scheduled to release its monthly WASDE report at
noon EST Thursday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
December 08, 2021 15:41 ET (20:41 GMT)
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