Soybean Futures Drop After Brazil Confirms Record Output -- Daily Grain Highlights
January 10 2024 - 3:29PM
Dow Jones News
By Kirk Maltais
-Soybeans for March delivery fell 1% to $12.35 1/2 a bushel, on
the Chicago Board of Trade on Wednesday, dropping in response to
Conab cutting its outlook for Brazilian soybean production less
than hoped for by traders.
-Corn for March delivery fell 0.1% to $4.59 a bushel.
-Wheat for March delivery were unchanged at $6.10 a bushel.
HIGHLIGHTS
Grabbing for the Record: Despite Brazilian crop agency Conab
making cuts to its outlook for 2023/24 soybeans, the agency's
projections remain record-high. Conab is now forecasting a
Brazilian soybean harvest of 155.3 million tons - which while down
from 162 million tons to start the year is still more than the
154.6 million ton record set last year. Traders had hoped to see
deeper cuts to Brazilian production, sending soybeans lower after
it became clear that the country was set for record output.
Verge of Volatility: CBOT grains were caught in a choppy session
today, with corn and wheat staying close to neutral while soybeans
slid. Much of the volatility comes from automated trading chasing
trends ahead of Friday's WASDE report, said AgResource in a note.
"Algos/AI pushes trends until the market pushes back," said the
firm. For soybeans, automated trading added pressure to futures
following the release of Conab's report.
INSIGHT
Overly Sold: Negative momentum has persisted for CBOT grains,
even as analysts say grains across the board have room to turn
higher. "Corn is oversold," said AgriSompo in a note. "We are in
front of a big report on Friday, and that could lead to some buying
over the next couple of sessions." However, that buying did not
appear today - even if last Friday's Commitments of Traders report
from the CFTC confirmed large net shorts for grains, particularly
corn.
Sour Taste: U.S. grain export sales are expected to turn higher
than last week's poor showing, but analysts are forecasting that
sales will continue to be weak, and as a result middling export
demand will continue to keep a lid on futures. "Price gains are
limited due to current soft demand, tied to an anemic domestic and
global economy, with particular focus on China," said Arlan
Suderman of StoneX in a note. However, analysts surveyed by The
Wall Street Journal are holding out for the possibility of a surge
in sales, with corn sales estimated as rising as high as 1.2
million metric tons this week.
Early Surge: Inventories of ethanol in the U.S. surged into the
New Year, rising to levels previously seen last spring. According
to the latest data from the EIA, U.S. ethanol inventories totaled
24.37 million barrels through the week ended Jan. 5. That's up
792,000 barrels from the previous week, and is the highest
inventories have been since mid-April 2023. Analysts surveyed by
Dow Jones this week were expecting a smaller uptick in inventories.
Average daily production meanwhile rose to 1.062 million barrels a
day from 1.049 million barrels a day the previous week.
AHEAD
--The USDA will release its weekly export sales report at 8:30
a.m. ET Thursday.
--The USDA will release its monthly WASDE report at noon ET
Friday.
--The USDA will release its quarterly grain stocks report at
noon 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
January 10, 2024 15:14 ET (20:14 GMT)
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