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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