Wheat Higher as Investors Chase Rally
By Kirk Maltais
--Wheat for July delivery rose 2.4% to $7.44 1/2 a bushel, its
highest close since February 2013 on the Chicago Board of
--Corn for July delivery rose 1.6% to $7.08 a bushel, its
highest close since March 2013.
--Soybeans for July delivery rose 0.2% to $15.45 1/2 a bushel,
its highest close since November 2012.
Rocket Ride: Grain futures across the board jumped again
Wednesday. "While the market does have supportive news such as the
ongoing crop stress in Brazil and the need for rationing, these are
not new stories," said Karl Setzer of AgriVisor. "There [is] some
thought rains will slow plantings in the U.S. next week, but not
enough to drop progress behind average." Wheat futures gained the
most, being less overbought than soybeans or corn.
No Big Deal: The USDA confirmed this morning that China canceled
140,000 metric tons of corn it previously agreed to purchase for
delivery in the 2020/21 marketing year. But that didn't derail
buying momentum for corn. "China canceled old crop corn sales today
and it can barely keep July corn negative on the day. This is
bullish price action," said Craig Turner of Daniels Trading. "Cash
prices are strong, planting progress is good but not great, and the
market still needs to ration demand."
Break In The Weather: Weather in U.S. crop-growing areas should
improve in the coming days - particularly in parched areas like the
northern plains. "Beneficial precipitation is still expected
through Sunday from north--central Montana into South Dakota and
southwestern North Dakota," said Terry Reilly of Futures
International. "This will help raise soil moisture in the southwest
part of the most drought--stricken area of the Northern Plains;
though, more precipitation will still be needed." Temperatures are
expected to dip to below freezing at certain points through the
rest of the week, which may damage any emerging crops in the
Longer View: Grain prices are expected to moderate as the year
continues, but some analysts don't think they'll drop off their
current levels by much. "High prices can therefore still be
expected, especially as inventories of both products are hardly
likely to rise in the US," said Commerzbank. "Though planting is
underway, the distribution of U.S. acreage is still not clear,
making for correspondingly high levels of uncertainty." The bank
forecasts that for the fourth quarter of 2021, CBOT wheat will have
an average price of $6.70 per bushel, $5.50 per bushel for corn and
$13.50 per bushel for soybeans.
Pumping the Brakes: After falling for 10 consecutive weeks, U.S.
ethanol inventories have grown this week, according to data from
the EIA. In its latest report released this morning, ethanol
inventories rose approximately 700,000 barrels to 20.4 million
barrels for the week ending April 30, up from 19.7 million barrels
last week. It's the first time since early February that stocks
have risen. Analysts surveyed by Dow Jones had forecast ethanol
inventories to drop, totaling anywhere from 19 million barrels to
19.69 million barrels. Meanwhile, ethanol production rose 7,000
barrels per day to 952,000 barrels per day, according to the EIA.
It's the highest production since early April.
--The USDA will release its weekly export sales report at 8:30
a.m. ET Thursday.
--Beyond Meat Inc. will release its first quarter earnings after
the stock market closes Thursday.
--The CFTC will release its weekly commitment of traders report
at 3:30 p.m. ET Friday.
Write to Kirk Maltais at firstname.lastname@example.org
(END) Dow Jones Newswires
May 05, 2021 15:42 ET (19:42 GMT)
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