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Wheat Finishes Lower on Volatile Day - Daily Grain Highlights

By Kirk Maltais

 

--Wheat for July delivery fell 4.6% to $11.95 1/4 a bushel on the Chicago Board of Trade Tuesday, recovering somewhat from a more than 10% drop midday.

--Corn for May delivery rose 0.3% to $7.53 a bushel.

--Soybeans for May delivery rose 1.1% to $16.89 3/4 a bushel.

 

HIGHLIGHTS

 

Bouncing All Over: Wheat futures on the CBOT fell by extended limits of $1.30 per bushel - although prices quickly pared losses. Today's action follows the record 40% surge last week, with many traders locking in profits ahead of tomorrow's WASDE report. The selling also comes in reaction to drought conditions in U.S. regions growing winter wheat - bad timing for a smaller US crop when Ukraine and Russia exports aren't making it to market amid the fighting there. "The timing of this couldn't be much worse, with roughly 1/3 of global wheat exports being affected in the Black Sea region and replacement from elsewhere becoming more important to limit the impacts felt in the market," said Arlan Suderman of StoneX.

Better Weather: The war in Ukraine has pushed South American weather to the backburner in grain traders' minds - but it isn't a totally forgotten factor. "The overall weather has improved significantly, and damage is irreversible for many crops, not for all, and particularly not for the safrinha corn," said Dan Hueber of the Hueber Report. Mr. Hueber adds that the second corn crop in Brazil is now 81% planted, which is 27% ahead of the pace last year. The first crop is now 45% harvested. A better-than-expected crop means more corn on the world export markets than expected.

 

INSIGHTS

 

Dragging On: A big question traders are asking now is how long Russia's war on Ukraine will last. "It's the length of the Russian war on Ukraine that determines the need for acute demand rationing with Russian/Ukraine winter grain exports starting in earnest in July," said AgResource. "And as Ukraine infrastructure is damaged, it will take months for Ukraine to get corn, wheat and sunoil grain exports back online." Plantings of new crops in the springtime are also threatened in Ukraine if war continues into April, the firm adds.

It's Fundamental: With wheat futures on the CBOT moving lower after rocketing over the past week, corn futures followed suit for much of the day - and are likely to return to trading on fundamentals outside of the conflict in Ukraine. "There has been concern that once the May wheat contract came off limit up, the market would correct and that is what is happening this morning," said Tomm Pfitzenmaier of Summit Commodity Brokerage. "It may take a day or two for corn to separate itself from the wild wheat market." Mr. Pfitzenmaier adds that with Ukraine and Russia blocked out of the world export market, U.S. corn looks to have an even stronger position than usual.

 

AHEAD:

 

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

--The USDA will release its monthly world supply and demand report at noon eastern time.

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

 

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

 

(END) Dow Jones Newswires

March 08, 2022 15:34 ET (20:34 GMT)

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