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Corn Soars to More Than 7-Year High on Shrinking Supply

By Kirk Maltais

 

--Corn for March delivery rose 5.1% to $5.17 1/4 a bushel, on the Chicago Board of Trade Tuesday, closing limit-up to its highest level in over 7 years as the USDA confirmed reduced production and ending stocks.

--Wheat for March delivery rose 4.8% to $6.65 a bushel.

--Soybeans for March delivery rose 3.3% to $14.18 1/4 a bushel.

 

HIGHLIGHTS

 

To the Moon: CBOT grain futures climbed sharply following the USDA's monthly WASDE report. Corn led the way, surging to limit up or 25 cents per bushel, from up only 0.2% before the report. For grain traders, losses to the U.S. corn yield exceeding that of usage spurred talk of demand rationing, which was until now limited to U.S. soybeans. "It's a supply that continues to erode," said Don Roose of U.S. Commodities.

Back To The Races: Today's WASDE report showed supplies of U.S. row crops recoiling even more than previously expected. Grains traders think that major funds are going to power CBOT futures to new heights. "It's an off-to-the-races kind of thing," said Jason Britt of Central States Commodities. "By the market reaction, it definitely makes you think they're in a position to add more length to this."

Russian Ruse?: CBOT wheat futures benefitted from factors outside of the WASDE Tuesday, amid reports that the Russian government is looking to possibly increase its export tax on wheat - which could turn more export interest toward other countries. "It is interesting that Russia would increase their export tax only a month or so after Putin expressed displeasure with higher food prices," said Doug Bergman of RCM Alternatives. "Maybe they don't have as much wheat as the world thinks?" Russia's current plans are for $30 per metric ton on its wheat exports starting in February.

 

INSIGHTS

 

Land Grab: With U.S. grains prices finding new highs Tuesday, some traders are looking to the spring growing season -- and the possibility farmers may scramble to find new acres to reap the benefits of higher prices. "We're going to need every bit of acreage we can possibly get," said Jason Britt of Central States Commodities. As a result, farmers may seek out more "marginal land" to plant on, said Mr. Britt -- something that may dilute the yields and quality of US crops in the 2021/22 growing season.

Egypt Balks: Amid new indications Russia may increase export tax plans on its wheat, Egypt - a major export buyer - cancelled its wheat tender Tuesday. Egypt's state import agency, the General Authority for Supply Commodities, launched the tender late Monday seeking an unspecified amount of wheat for shipment between Feb. 18 and March 5. GASC received offers from just four trading houses in the tender, a lower number than usual, which traders said was likely due to concerns of higher Russian wheat export taxes. The lowest offer was from Romania, at $292.97 a metric ton, according to a lineup of offers seen by The Wall Street Journal.

 

AHEAD:

 

--The EIA will release its weekly ethanol production and stocks report at 10:30 a.m. ET Wednesday.

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

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

 

Will Horner contributed to this article.

 

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

 

(END) Dow Jones Newswires

January 12, 2021 15:46 ET (20:46 GMT)

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