By Kirk Maltais
--Wheat for December delivery rose 0.7% to $5.68 3/4 a bushel, on the Chicago Board of Trade on Tuesday, with traders encouraged by the USDA confirming a flash sale of U.S. wheat to China.
--Corn for December delivery fell 0.2% to $4.88 1/4 a bushel.
--Soybeans for November delivery fell 0.2% to $12.74 3/4 a bushel.
HIGHLIGHTS
Fresh Demand: The USDA announced a flash sale of soft red wheat to China this morning --with 220,000 metric tons sold for delivery in 2023/24. The new purchase was a surprise for traders, and provided support for wheat futures today. "The rumors of Chinese interest in soft red wheat appear to be true," said Charlie Sernatinger of Marex in a note. "There were rumors today that a cargo of U.S. spring wheat may have been sold to China as well this week." The sale is taken as evidence that U.S. wheat is finally competitive pricewise on the world stage.
Better Yields: StoneX Group raised its estimates for corn and soybean yields ahead of next week's WASDE report. The firm forecasts U.S. corn yield at 175.5 bushels an acre, which is up from 175 bushels an acre reported last month. Soybean yields are seen at 50.4 bushels an acre, up from 50.1 bushels an acre estimated last month by the USDA. Trading took cues from StoneX's outlook, with fund traders unwilling to ease short positions while harvesting continues. "Managed funds are still liquidating longs and the market continues to build carry," said Doug Bergman of RCM Alternatives in a note, in reference to soybeans.
Moving Forward: The USDA's Crop Progress report showed that harvesting of corn and soybeans is 23% complete--which is higher than both this time last year and the average pace of the past 4 years. The condition of the soybean crop also improved by 2 points to 52% good or excellent condition, while corn stayed unchanged at 53% good or excellent condition. Crops with improved quality along with a harvest chugging along are expected to be a consistent sources of pressure for futures in the coming weeks.
INSIGHT
Pulling Back: On-farm stocks of Russian grains have been at record highs since August, but have fallen back as wheat exports climb, said SovEcon in a note. The firm estimates Russian on-farm stocks at 28.8 million metric tons, which is a 9% drop-off from this time last year. "On-farm wheat stocks dipped below record levels amidst active exports and a declined wheat production," said the firm. SovEcon adds that wheat exports are expected to be 2 million tons higher than the previous year at 48.9 million tons, while production is down 12.6 million tons to 91.6 million tons.
Trickle-Down Effect: A government shutdown over the weekend would have introduced a sizable amount of volatility to agricultural prices, with federal data being a key factor for price discovery at this point in the season. Even so, the 2018 Farm Bill expired on Sept. 30, and nothing new has been enacted in its place--making Washington a key focus for farmers attempting to plan for next year. "When Congress fails to do their job, it makes it hard for us to do our job," said Jenni Tilton-Flood, a farmer at the Clinton, Maine-based Flood Brothers Farm, a dairy farm that produces corn and hay to feed its 3,400 cows. Crop subsidy and dairy support programs will expire at the end of the year without a renewed Farm Bill.
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.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
10-03-23 1521ET
