Wheat Rises Ahead of WASDE Report
By Kirk Maltais
-- Wheat for September delivery rose 0.8% to $4.95 a bushel on
the Chicago Board of Trade Tuesday, in reaction to Egypt buying a
new tender of Russian wheat and ahead of Wednesday's WASDE report
from the USDA.
--Corn for December delivery rose 0.2% to $3.23 1/2 a
--Soybeans for November delivery rose 0.1% to $8.73 1/2 a
Loading Up: Egypt's state import agency, the General Authority
for Supply Commodities, bought 120,000 metric tons of Russian wheat
at an international tender on Tuesday. The purchase comprised two
60,000 ton cargos each costing $205.50 a ton with an additional
$14.10 a ton for freight costs. Price movement for wheat was
partially in reaction to Egypt's buying, but otherwise traders were
positioning themselves ahead of tomorrow's WASDE report. "This is
coming down to the report tomorrow, and how the spec is set up,"
said Charlie Sernatinger of ED&F Man Capital.
Brace Yourselves: Tomorrow's WASDE is expected to show higher
bushels-per-acre yields for corn and soybeans. "Big yields and big
crops are expected on Wednesday with the Midwest harvest starting
in just 4-5 weeks," said AgResource. If yields exceed trader
expectations, then futures will likely plunge -- as these higher
yields would "swamp existing Chinese demand," said the firm.
Quality Decline: A slight decline in crop quality reported by
the USDA late Monday supported futures Tuesday. The USDA this week
says that 71% of the U.S. corn crop is in good or excellent
condition, down from 72% last week. While the decline had corn
futures up this morning, grain traders don't expect the uptick to
last. "Even with a slight decline on corn, these ratings are some
of the highest in history for this time of year," said Karl Setzer
of AgriVisor. "These ratings are also why most traders think the
crops will be larger than previously thought in tomorrow's WASDE
report." Soybean crop ratings rose to 74% this week.
Storm Gusts: Hurricane force winds affecting crop-growing areas
from Ohio to South Dakota have likely made a sizable impact on
crops grown in the Midwest - specifically corn, which is more
likely to suffer from being broken in the winds than other crops
like soybeans. However, how large an impact the winds have had on
what would otherwise be an ample 2020 corn crop remains to be seen.
"The question is how much of an impact, which is very hard to
assess at this point," said Scott Irwin of the University of
Illinois. Currently, Irwin estimates that the storms have shaved
off 100 million to 300 million bushels of corn production in the US
in 2020 - a pittance when compared to the 15 billion bushels
expected to be produced in 2020.
Keeping Pace: 132,000 metric tons of soybeans have been sold to
China for delivery in the 2020/21 marketing year, the USDA says.
That makes it 720,000 tons of soybeans sold to China this week
alone. Even so, grains traders are maintaining a skeptical outlook
on soybean futures, waiting for this weekend's virtual meeting
between the U.S. and China to ascertain if China plans to meet its
buying obligations under the phase one trade agreement. "Beans are
in a downtrend as the crop is well-watered and production ideas are
growing," said Doug Bergman of RCM Alternatives.
--The EIA releases its weekly update on ethanol production and
inventories at 10:30 a.m. ET Wednesday.
--The USDA releases its monthly WASDE report at noon ET
--The USDA will release its latest weekly export sales numbers
at 8:30 a.m. ET Thursday.
Will Horner contributed to this article.
Write to Kirk Maltais at firstname.lastname@example.org
(END) Dow Jones Newswires
August 11, 2020 15:40 ET (19:40 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.