WHEAT FUTURES (W) -

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Wheat Falls in Reaction to Fed Comments

03/04/2021 | 03:42pm

By Kirk Maltais

--Wheat for May delivery fell 0.8% to $6.51 a bushel, on the Chicago Board of Trade Thursday, with the overall grains complex sinking late in the day in reaction to comments from Federal Reserve Chairman Jerome Powell.

--Corn for May delivery fell 0.5% to $5.32 1/2 a bushel.

--Soybeans for May delivery rose 0.2% to $14.10 1/2 a bushel.

HIGHLIGHTS

Fed Fears: In his last scheduled public appearance before the Fed's next policy meeting March 16-17, Mr. Powell affirmed his intention to maintain ultra-low interest rates until the U.S. labor market improves much further - an affirmation that sent equities and commodities alike down in afternoon trading. "Wheat traded both sides of unchanged before slipping under the waves late, after Fed Chairman Powell disappointed the macro boys and the dollar got stronger," said Charlie Sernatinger of ED&F Man Capital.

Sparse Precipitation: A dry outlook for weather in Argentina provided support for soybean prices Thursday. "Markets trading mixed to higher overnight with the dry outlook in Argentina as well as the impossibly tight U.S. bean balance sheet projections providing support," said Doug Bergman of RCM Alternatives. Isolated showers are forecast for Argentina into next week, with temperatures above normal, according to DTN.

Taps Turned Off: Strength in global vegetable oil markets were also a source of support for soybean futures Thursday. "Global veg oils are supporting soybeans," said Karl Setzer of AgriVisor. "Not just from Asia, but the canola market from Canada as well." Tightness in supplies has been a factor pushing futures contracts on Asian and Canadian exchanges. For CBOT soybeans and soyoil, the support kept them higher throughout trading today - although soybeans gave back most of their gains later in the day, soyoil closed up 1.9% to $50.71 per pound.

INSIGHTS

Preparing for a Wave: Cargill Inc. is ramping up investment in its soybean operations as the oilseed is set to dominate the agricultural stage in 2021. The year is young, but U.S. soybean exports in dollar terms last year were about 40% ahead of 2019's level, driven by a late 2020 surge in shipments to China, and crop problems in South America. With soaring prices likely to lead to big US planting, Cargill is plowing $475 million into its soybean facilities, expanding processing plants in Ohio and Iowa and automating some loading operations in Kansas and Missouri.

Crestfallen Corn: New corn export sales for the week ending Feb. 25 came in lower than expected by grains traders - totaling 154,700 metric tons across both the 2020/21 and 2021/22 marketing years. That's well below the low end of 500,000 tons forecast by traders surveyed by The Wall Street Journal this week. However, exports - actual shipments of corn already sold - hit a marketing-year high in this week's report, totaling 2.01 million tons. Meanwhile, wheat and soybean totals fell near the low end of traders' forecasts.

Shedding Stocks: The USDA's monthly WASDE report is expected to show another cut to U.S. grain stockpiles, according to analysts surveyed by The Wall Street Journal. Corn stockpiles for the 2020/21 marketing year is expected to fall to 1.46 billion bushels, down from 1.5 billion bushels projected last month. Meanwhile, soybean inventories are expected to drop 3 million bushels to 117 million bushels, and wheat stocks are expected to stay unmoved at 836 million bushels. World corn and soybeans inventories are also expected to decline - with corn falling 1.2 million metric tons to 285.3 million tons and soybeans falling 700,000 tons to 82.7 million tons.

Supply Backup: Grain shipments were lower near the end of February, according to the USDA's latest grains transportation report. For the week ending February 20, U.S. Class I railroads originated 18,860 grain carloads, down 17% from the previous week and 1% lower than last year. Meanwhile, barge shipments of grains totaled 439,100 metric tons for the week ending Feb. 27 - down 10% from the previous week. A deep freeze in U.S. crop-growing areas stifled supply chains in February, but a thaw seen nationwide has allowed operations to return to normal.

AHEAD:

--The CFTC will release its weekly commitment of traders report at 3:30 p.m. ET Friday.

--The USDA will release its weekly export inspections report at 11 a.m. ET Monday.

--The USDA will release its monthly supply and demand report at noon ET Tuesday.

Jacob Bunge contributed to this article.

Write to Kirk Maltais at kirk.maltais@wsj.com

(END) Dow Jones Newswires

03-04-21 1540ET

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