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Corn Futures Slide as Strong Planting Weather Mulled

03/03/2021 | 03:55pm

By Kirk Maltais

--Corn for May delivery fell 1.8% to $5.35 1/4 a bushel on the Chicago Board of Trade on Wednesday, with grains traders anticipating good spring weather ahead enabling a large planting season for U.S. corn.

--Wheat for May delivery fell 1.5% to $6.56 a bushel.

--Soybeans for May delivery fell 0.4% to $14.07 1/4 a bushel.

HIGHLIGHTS

All Systems Go: "Corn was down ... on talk of good early planting weather and lack of fresh export demand, plus lower Argentine export premiums," said Charlie Sernatinger of ED&F Man Capital. A record 182 million acres of corn and soybeans is expected to be planted by farmers this year, although the USDA will update this figure with its Prospective Plantings report at the end of the month.

No Direction: Outside of the weather, traders were largely unable to find direction in the market. "Values have been back-and-forth in recent weeks with a lack of resting orders creating 'air pockets' for price," AgResource said.

INSIGHT

Finding Normalcy: After thawing from a deep freeze in previous weeks, U.S. ethanol production has climbed back - rising to 849,000 barrels per day for the week ended Feb. 26, according to the EIA, up 191,000 barrels from 658,000 barrels per day the previous week, which was the lowest level since the Covid-19 pandemic first hit ethanol production last year. The uptick was more than expected by market participants informally surveyed by Dow Jones, but still puts U.S. ethanol production at a less-than-optimal position. "At 849,000 barrels per day week ending February 26, this will not favor USDA's 4.950 billion bushel corn usage unless we see [over] 925,000 [barrels] per day rebound by mid-March," said Terry Reilly of Futures International. Inventories, meanwhile, fell 360,000 barrels to 22.4 million barrels.

Keeping Things Muted: Export sales of U.S. grains are expected to stay low this week, according to grains traders surveyed by The Wall Street Journal. Corn exports are expected to lead the way this week, totaling anywhere from 500,000 metric tons to 1.05 million tons. Soybeans are expected to be at 200,000 tons to 700,000 tons, while wheat is expected to be at 100,000 tons to 500,000 tons. The low end of all three grains is roughly where sales totaled last week -- which were considered low among traders and seen as evidence of demand rationing taking place.

Fundamental Focus: China's appetite for U.S. grain exports isn't expected to evaporate any time soon, said Ray Young, executive vice president of Archer Daniels Midland. Speaking on a virtual conference hosted by Bank of America, Mr. Young said the company sees China's appetite for U.S. soybeans and corn as being based on need to use the commodities, not just simply stockpile them. "I think the reason China is buying agricultural products throughout the world is fundamental demand," said Mr. Young, calling China's appetite a medium-term trend. The reason, Mr. Young said, is because China has escaped the throes of the Covid-19 pandemic while areas like the U.S. still grapple with it.

AHEAD:

--The USDA will release its weekly export sales report at 8:30 a.m. ET Thursday.

--USDA and Statistics Canada release its biannual reports on cattle, sheep and hog herds at 3 p.m. ET Thursday.

--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

Corrections & Amplifications

This item was corrected at 3:56 p.m. ET to show that US ethanol production rose to 849,000 barrels per day for the week ended Feb. 26, according to the EIA, up 191,000 barrels from 658,000 barrels per day the previous week. An earlier version incorrectly said production rose to 849,000 barrels per day this week from 658,000 barrels per day last week.

(END) Dow Jones Newswires

03-03-21 1555ET

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