Wheat Falls on Surge in U.S. Dollar Strength -- Daily Grain Highlights
By Kirk Maltais
--Wheat for March delivery fell 2.3% to $7.77 a bushel on the
Chicago Board of Trade Thursday, with concerns about the
Russia-Ukraine situation as well as the Federal Reserve's plan to
raise rates sending the U.S. dollar surging, which typically
affects the appetites of buyers for U.S. grain exports.
--Corn for March delivery fell 0.3% to $6.25 1/4 a bushel.
--Soybeans for March delivery rose 0.6% to $14.48 1/4 a
No Pulling Punches: The U.S. dollar jumped Thursday, with the
ICE index posting one of its biggest gains since March 2020. This
put pressure on CBOT grains--particularly wheat. "U.S. wheat
futures are lower on follow-through selling and the USD screaming
higher," said Terry Reilly of Futures International. However,
strong export sales reported by the USDA Thursday acted as a
counterweight to this pressure. In its weekly report, the USDA said
that export sales of wheat in the 2021/22 marketing year totaled
676,700 metric tons--a marketing-year high.
Dried Out: Brazilian soybean exports will decline slightly in
2022 from 2021 because of a drought that has reduced productivity
in some states, according to agricultural consultancy Safras &
Mercado--providing U.S. soybean futures with some support. The
group cut its forecast for exports this year to 85.5 million metric
tons of the oilseeds from its previous forecast of 90 million tons.
In 2021, Brazil exported an estimated 86.1 million tons, Safras
said. Analysts have been reducing their forecasts for soybean
production in the 2021-2022 growing season for weeks as the drought
in the southern states has continued.
Fund Direction: In recent trading sessions, grain futures have
been affected largely by movement of money by large investors--who
see commodities as a whole as a safe haven amid concerns about
inflation. "Managed money investors have started to carry more
commodities in their portfolios which has been beneficial for corn,
soybean, and wheat values at times," said Karl Setzer of AgriVisor.
"This has also caused an increase in market volatility with futures
rallying then selling off with no traditional fundamental reason."
According to the last CFTC weekly report, managed money is carrying
large long positions across all grains, particularly corn.
Slowed Pace: China's Lunar New Year, which begins Feb. 1 and
lasts through Feb. 15, is going to slow down the pace of U.S. grain
exports as China stays out of the market while on holiday. The
absence of China from the export market may be noticeable, said
AgResource. "China this week has been moderately active in securing
spot beans from Brazil and new crop supplies from the U.S.," said
the firm. Trading of soybeans and soy products on the CBOT has been
supported by a slimming picture of South American soybean
--The CFTC will release its weekly commitment of traders report
at 3:30 p.m. ET Friday.
--The USDA will release its weekly grains export inspections
report at 11 a.m. ET Monday.
--The USDA will release its monthly grain crushings report at 3
p.m. ET Tuesday.
Jeffrey Lewis contributed to this article.
Write to Kirk Maltais at email@example.com
(END) Dow Jones Newswires
January 27, 2022 15:23 ET (20:23 GMT)
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