Wheat Drop Extends as World Stocks Look to Grow
By Kirk Maltais
--Wheat for March delivery fell 2.3% to $6.60 1/4 a bushel on
the Chicago Board of Trade Friday, in reaction to a new outlook
from the International Grains Council showing growing wheat stocks
globally in the next marketing year.
--Corn for March delivery fell 0.4% to $5.47 1/2 a bushel.
--Soybeans for March delivery fell 0.2% to $14.04 1/4 a
Future Buildup: Wheat futures on the CBOT led the move down on
grains Friday, due in part to Thursday's forecast from the
International Grains Council showing expectation of global wheat
stocks growing in the next marketing year. "The International Grain
Council obviously believes that the global wheat crop is looking
better as a whole, as they have increased estimates in the latest
update," said Dan Hueber of the Hueber Report. Wheat harvests are
now expected to yield 773 million tons of the grain, the IGC
says--with stocks rising 2% in 2021/22.
Clouds Roll In: Traders lost their optimistic verve for grains
in trading Friday, with futures spending the day lower. "The bull
doesn't have any compelling arguments to do so today," said Arlan
Suderman of StoneX. "Stocks are still tight and weather risks
remain, as partially outlined below, but that's a longer-term story
that will take time to develop." For this session, news spurring
buying interest was slim, said Mr. Suderman.
Macro View: Also weighing down grains futures Friday was
pressure from macro markets. "The steepening of the U.S. yield
curve and fall in macro financial markets is also providing bearish
tailwinds," said AgResource. The Dow Jones Industrial Average is
down over 330 points in trading Friday, with heightened yields
sinking tech stocks.
Fresh Focus: With the month of February nearing its end, the
focus of grains traders going into March is expected to turn to the
USDA's Prospective Planting Report, which comes out at the end of
March, said Karl Setzer of AgriVisor. The report will supply
another view of farmers' planting intentions, following up on the
USDA's initial forecasts supplied at its Agricultural Outlook Forum
Back on the Horse: Even with grains futures as a whole down in
trading Friday, the correction is expected to be short-lived--at
least for corn. "We would eventually like to be sellers of corn,
but do not expect the corn market to top out until sometime in the
March/April time period," said Tomm Pfitzenmaier of Summit
Commodity Brokerage. However, some amount of farmer selling--for
what old crop stocks they have left--may cause some volatility in
corn prices. "As a seller of corn, if you have cash flow needs,
obviously these are very good prices and making a few sales at
these levels would be a decision that would be hard to argue with,"
Mr. Pfitzenmaier added.
--The USDA will release its weekly export inspections report at
11 a.m. ET Monday.
--The USDA will release its monthly grains crushing report at 3
p.m. ET Monday.
--The EIA will release its weekly ethanol production and stocks
report at 10:30 a.m. ET Wednesday.
Write to Kirk Maltais at email@example.com
(END) Dow Jones Newswires
February 26, 2021 15:08 ET (20:08 GMT)
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