Wheat Drops as Funds Prepare for WASDE
By Kirk Maltais
-- Wheat for July delivery fell 4.4% to $7.28 1/4 a bushel on
the Chicago Board of Trade Monday, with large funds capturing some
of their profits ahead of Wednesday's WASDE report.
-- Corn for July delivery fell 2.6% to $7.13 a bushel.
-- Soybeans for July delivery fell 0.2% to $15.92 3/4 a
Wary For WASDE: Profit-taking in grains among fund traders
appeared mostly focused on wheat, with the most-active contract
leading the CBOT down Monday. Much of the selling appears to be
related to Wednesday's WASDE report from the USDA. "The report is
one of the most important of the spring, and the recent
conservative nature of USDA regarding China has placed fund
managers on the defensive," said AgResource.
Dampened Spirits: Wetter-than-expected weather in U.S. planting
areas over the weekend weighed on grain futures and "dampened the
wicks on many a bull candle," said Dan Hueber of the Hueber Report,
adding that the selling Monday came "despite generally supportive
news from around the globe, including another big export sale of
corn to China." Hueber summed it up by saying, "Do not lose sight
of the fact that we have experienced ten months of nearly
uninterrupted rally in the grain/soy sector, which means we have no
doubt developed a certain amount of 'anticipatory' premium in these
China Chatter: The USDA confirmed this morning that China has
canceled more corn it had intended to buy in the 2020/21 marketing
year, while buying more in the 2021/22 marketing year. According to
the USDA, China has purchased 1.02 million metric tons of corn for
next year, while canceling 280,000 tons that was scheduled for
delivery in the current marketing year. The cancellation of exports
for the current marketing year suggests that corn futures may have
reached a level where demand rationing is kicking in. "Considering
the recent gains, the shape that the crop went in in most areas,
and the improved weather outlook, new crop corn looks to have
downside risk," said Doug Bergman of RCM Alternatives.
Biofuel Buildup: Archer Daniels Midland Co. announced Monday
plans to build a new soybean crush facility in North Dakota, in
order to meet increased demand for soy products in the animal feeds
and biofuel industries. According to ADM, the facility will be a
$350 million plant built in Spiritwood, N.Dak., and will process
approximately 150,000 bushels of soybeans per day. The plant is
scheduled to come online ahead of the 2023 harvest. The
announcement comes as soybean oil futures on the CBOT have been on
a steady climb--up over 50% year-to-date.
Inspections Down: Corn export inspections fell this week, this
indication coming as the USDA confirms China is switching corn
purchases from the current marketing year to the next one. For the
week ended May 6, corn export inspections totaled 1.71 million
metric tons--down from 2.21 million tons in the previous week.
China and Japan are among the two major destinations for corn
inspected, at 342,056 tons and 334,529 tons, respectively.
Meanwhile, soybean inspections and wheat inspections are up
slightly from the previous week--with soybeans at 236,918 tons and
wheat at 545,587 tons.
--The EIA will release its weekly ethanol production and stocks
report at 10:30 a.m. ET Wednesday.
--The USDA will release its monthly supply and demand report at
noon ET Wednesday.
--The USDA will release its weekly export sales report at 8:30
a.m. ET Thursday.
Write to Kirk Maltais at email@example.com
(END) Dow Jones Newswires
May 10, 2021 15:45 ET (19:45 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.