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Wheat Lower as Funds Step Up Selling - Daily Grain Highlights

By Kirk Maltais

 

--Wheat for July delivery fell 3% to $11.54 3/4 a bushel on the Chicago Board of Trade Tuesday as the risk-off view across financial markets extended to grains with farmers speeding up planting.

--Corn for July delivery fell 1.8% to $7.71 3/4 a bushel.

--Soybeans for July delivery rose 0.4% to $16.93 a bushel.

 

HIGHLIGHTS

 

Active Selling: Although the USDA's Crop Progress report showed continued delays in spring wheat planting -- with only 49% planted versus the 5-year average of 83% -- fund traders actively sold wheat futures. Technical selling and profit taking were the dominating activities, Joel Karlin of Western Milling told the WSJ. Additionally, some are looking at wheat as a potential alternative to corn if they can't get their corn crops in the ground. "At this late date producers in Minnesota and North Dakota...may opt for [hard red spring wheat] instead of prevented plantings," said Mr. Karlin.

Playing Catch-Up: In its weekly Crop Progress report released Monday afternoon, the USDA said U.S. farmers sped up their crop planting - with 72% of U.S. corn having been planted, versus a 5-year average of 79%. Soybeans are 50% planted, versus a 5-year average of 55%. "As expected, a large amount of corn and soybean planting took place across the United States last week," said Karl Setzer of AgriVisor in a note.

Fundamental Focus: Grains were hit with concerns about export demand while weather conditions in crop-growing areas allowed farmers to catch up on their delayed planting. For corn, however, other fundamentals are at play pressuring the futures contract. "First, last week's planting progress exceeded expectations," said Arlan Suderman of StoneX in a note. "Second, the Reuters headline about the Biden Administration considering waivers on gasoline blending requirements reflects demand risks for producing ethanol. Third, Brazil announced today that it finally has a phytosanitary agreement to sell corn to China." The agreement between Brazil and China may limit export demand for U.S. grains.

 

INSIGHTS

 

Not Out of the Woods: The USDA's Crop Progress report showed that spring wheat planting is still well behind the average pace and winter wheat conditions remains low. Only 28% of the crop in good-or-excellent condition. Some traders think supply issues are a lingering issue for wheat, as weather issues are a problem all over the word, said Doug Bergman of RCM Alternatives in a note. "There are also planting delays in Canada, French and Indian crops have gotten smaller over the last couple months, and there continues to be unprecedented uncertainty in Russia/Ukraine," said Mr. Bergman.

Money Flows Out of Commodities: Open interest in commodities is at a four-month low, said JPMorgan in a note today. The firm says that open interest in the overall commodities market is at roughly $1.4 trillion, which is the lowest since the start of the year. Losses in the energy and metals markets are offsetting gains in categories like agriculture, the firm says. Grains and oilseeds in particular have seen growing open interest in the past two weeks, although it is still off 3% from a high seen in mid-April. Livestock open interest hasn't fared so well, maintaining a slide that began in early February.

 

AHEAD:

 

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

-Sanderson Farms Inc. will release its second quarter earnings report on Thursday.

--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

May 24, 2022 15:54 ET (19:54 GMT)

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