Wheat Drops as Rainy Forecast Offsets Crop Quality Concerns
By Kirk Maltais
--Wheat for September delivery fell 1.5% to $6.55 a bushel on
the Chicago Board of Trade Tuesday following USDA reports of a
decline in spring wheat quality set aside in anticipation of more
rain this week.
--Soybeans for November delivery fell 1.3% to 13.02 1/4 a
--Corn for July delivery rose 0.1% to $6.59 3/4 a bushel.
Wash Out: CBOT grain futures were weighed down by rainier
forecasts for U.S. growing areas, offsetting concerns about drops
in crop quality due to rains missing some key areas over the past
week. Yesterday's report from the USDA showed corn quality dropping
to 65% good or excellent condition, down from 68% last week.
Meanwhile, soybean conditions fell to 60% good or excellent, down
from 62% last week, and wheat declined to 27% from 37% last week.
"The crop condition rating did not drop quite as much as the trade
had been anticipating," said Tomm Pfitzenmaier of Summit Commodity
Much of the Same: Although discussions about weather conditions
in U.S. growing areas continue to dominate grain trader outlooks
for prices, a lack of any fresh news has futures lacking traction,
said Dan Hueber of the Hueber Report. "It would seem that the
market performance here is telling us that at this time and price
level at least, it has become less concerned about the weather, and
without something fresh to stimulate interest, the path of least
resistance is the downside," said Mr. Hueber. "All market moves
reach a point of saturation, and once there, it becomes quite
difficult to awaken them once again."
Bracing for Growth: Grain traders are looking forward to next
week's planted acreage report from the USDA, but are bracing for
the report to show farmers planted more crop acres than initially
forecast. "We are seeing a lot of planted acreage estimates for the
June 30 report and they are all high," said Craig Turner of Daniels
Trading. "Some analysts think we could see a combined 184 million
acres of corn and soybeans. If true, that suggests 90 million soy
and 94 million corn [acres]." A sharp uptick in crop prices this
spring may have incentivized farmers to grow more crops, in an
effort to take advantage of them.
Barrel Backlog?: The sharp uptick seen in U.S. ethanol
inventories in the EIA's report last week could extend into another
week, according to analysts surveyed by Dow Jones. They forecast
that ethanol inventories could rise to as high as 21 million
barrels - which would bring stocks back to levels last seen in
March. Last week, inventories jumped by over 640,000 barrels,
bringing them to 20.6 million barrels. Meanwhile, analysts forecast
daily production to rise by as much as 20,000 barrels per day to a
rate of 1.045 million barrels per day. What tomorrow's data shows
will influence trader views as to the demand picture for U.S.
Pulling Back: Large fund traders have accelerated their
withdrawal from long positions in grain futures, according to data
from the CFTC released Monday. In its latest commitment of traders
report, the CFTC said fund traders reduced their long positions in
corn futures by nearly 20,000 contracts for the week ended June 15.
For soybeans, funds reduced their long positions by nearly 26,000
contracts. For both, managed money funds are still maintaining net
long positions - but they are dwindling. The net long position for
funds in corn stands at nearly 255,000 contracts, while the net
long in soybeans is at just over 100,000 contracts.
--The EIA will release its weekly ethanol production and stocks
report at 10:30 a.m. ET Wednesday.
--The USDA will release its weekly export sales report at 8:30
a.m. ET Thursday.
--The USDA will release its quarterly hogs and pigs report at 3
p.m. ET Thursday.
--The USDA will release its monthly livestock report at 3 p.m.
Write to Kirk Maltais at email@example.com
(END) Dow Jones Newswires
June 22, 2021 15:33 ET (19:33 GMT)
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