By Kirk Maltais
--Corn for December delivery rose 1.3% to $3.65 a bushel on the Chicago Board of Trade Thursday, in reaction to flooding in China expected to hurt the country's corn crop -- and potentially open the door for larger U.S. corn purchases.
--Wheat for December delivery rose 0.8% to $5.48 1/4 a bushel.
--Soybeans for November delivery fell 0.1% to $9.77 1/2 a bushel.
HIGHLIGHTS
Soaking Wet: Flooding in China from Typhoon Haishen soaking already-saturated soil lifted U.S. corn futures Thursday. "If the Chinese crop is smaller than expected, they could become a massive importer of corn this year," said RJO Futures. "Traders await any news on potential China production losses due to the typhoon rains in the past three weeks which have left flooding issues as a problem."
Follow the Leader: Wheat futures finished higher Thursday as U.S. prices followed their Russian counterparts higher. "Spot Russian fob wheat has rallied to $221 per metric ton, which reflects a rally of $23 per ton in just 30 days," said AgResource. "Following weeks of being - by far - the world's cheapest origin, demand is being found." Much of the Russian wheat supply is far away from the country's ports, AgResource adds - making it more expensive to transport for export. U.S. wheat futures have been on a downward slide this month, slipping for five consecutive sessions since Sept. 2.
Prep Work: With the monthly WASDE report due out at noon Friday, grains traders made much of their final preparations for the report today, said Karl Setzer of AgriVisor. "For the most part, trade is expecting to see declines in production from August." said Setzer. However, how much yield and production falls from the previous month will determine trader reactions post report.
INSIGHTS
Reductions Expected: The projections being released by the USDA in its monthly WASDE report tomorrow are expected to show U.S. corn production dropping by roughly 400 million bushels, according to estimates provided to The Wall Street Journal by grains analysts. Analysts say that they expect corn production to be pegged at 14.83 billion bushels, down from an estimate of 15.28 billion bushels last month. Meanwhile, soybean production is expected to drop by nearly 150 million bushels, to 4.29 billion bushels. This drop in production for both crops would reflect the damage to them done by a windstorm that hit the Midwest last month, as well as drought conditions in certain areas.
Eating the Surplus: Running counter to expectations that they'd grow, U.S. ethanol inventories fell sharply this week - declining by 889,000 barrels to 19.9 million barrels, according to the EIA. It's the lowest they've been since early August, which is the last time they dipped under the 20 million barrel mark. Meanwhile, production rose 19,000 barrels per day, to 941,000 barrels per day. That's the highest production since late July. Corn futures on the CBOT up 1.4% after the EIA report.
AHEAD:
--The USDA releases its weekly export sales report at 8:30 a.m. ET Friday.
--The USDA releases its monthly World Agricultural Supply and Demand report at noon ET Friday.
--The CFTC releases its weekly commitment of traders report at 3:30 p.m. ET Friday.
Write to Kirk Maltais at kirk.maltais@wsj.com
