Wheat Futures Drop on Weak Demand Outlook -- Daily Grain Highlights
December 27 2023 - 3:29PM
Dow Jones News
By Kirk Maltais
--Wheat for March delivery fell 2%, to $6.24 1/2 a bushel, on
the Chicago Board of Trade on Wednesday, with traders unconvinced
that signs of improving wheat export demand will lead to a lasting
change in that demand.
--Corn for March delivery fell 0.8%, to $4.77 a bushel.
--Soybeans for March delivery rose 0.1%, to $13.21 a bushel.
HIGHLIGHTS
Shake It Off: USDA data showing improved sales and shipments of
U.S. wheat didn't translate to a sustained rally for the grain,
with analysts still viewing demand for U.S. crops as weak. "Demand
has been poor for U.S. wheat as Russia production looks strong,"
Jack Scoville of Price Futures Group said in a note. The latest
round of USDA data has been mixed, with the USDA reporting a 78%
drop-off from the previous week in its last weekly export sales
report, while export inspections reported yesterday rose 51% from
the previous week.
Reversing Course: Traders today reversed course from Tuesday's
rally. "CBOT ag futures are lower in turnaround fashion, with crude
and equity markets correcting similarly," said AgResource in a
note. Crude oil fell 1.9% in trading Wednesday, with Brent crude
down 1.6%. Trade ahead of the turn of the year continues in low
volumes.
INSIGHT
Mixed Results: The status of Brazilian soybean crops are
important to the outlook of grain traders, and the early
indications from the region show mixed results. "Initial yields in
the early Mato-Grosso zones are clearly disappointing," said
AgriTel in a note. "However, later crops look more promising as
they have benefited more from the return of rains." Traders appear
to be positioning based on the belief that Brazilian soybeans will
improve their conditions in the coming weeks, with DTN in a note
today forecasting more showers in parched areas.
Slow Flow: The rate of wheat exports coming out of Russia has
slowed, according to data from SovEcon, a Russian agricultural
research agency. The firm forecasts that for the month of December,
exports totaled 3.8 million metric tons, down from 4.1 million tons
at this time last year. SovEcon says that the slowdown in exports
comes amid a slowdown in activity at Russian ports, as well as bad
weather in the Black Sea and Russian authorities attempt to
regulate the prices of wheat exports, all of which could serve to
turn futures back higher in the short-term.
Potential Pile-Up: Inventories of ethanol in the U.S. may cross
the threshold of 23 million barrels in this week's report,
according to analysts surveyed by Dow Jones this week. If this
comes true, then it will be the first time since mid-August that
inventories have exceeded that level. The uptick in stocks comes as
ethanol demand had one of its best years ever, according to the
Renewable Fuels Association. The RFA says ethanol consumption has
returned to highs last seen before the onset of the Covid-19
pandemic, driven by higher blend rates for motor fuel.
AHEAD
--The EIA will release its weekly ethanol production and stocks
report at 11 a.m. ET Thursday.
--The USDA will release its weekly export sales report at 8:30
a.m. ET Friday.
--The USDA will release its monthly Agricultural Prices report
at 3 p.m. ET Friday.
--The CFTC will release its weekly Commitment of Traders report
at 3:30 p.m. ET Friday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
December 27, 2023 15:14 ET (20:14 GMT)
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