By Kirk Maltais
--Wheat for May delivery rose 3.3% to $5.79 3/4 a bushel on the Chicago Board of Trade on Wednesday, in anticipation of more interest in U.S. wheat exports as competitors in the EU experience coronavirus-related supply-chain issues.
--Corn for May delivery rose 0.7% to $3.49 3/4 a bushel.
--Soybeans for May delivery fell 0.5% to $8.82 1/2 a bushel.
Eat Your Wheaties: After taking a break Tuesday, wheat again led grain futures higher. "The market remains in a steep uptrend as 'ownership' of a little extra inventory of food commodities is providing significant support," RJO Futures said. Supply bottlenecks in the EU are making countries interested in stocking up on wheat seek other sources, such as the U.S., RJO said. Also helping is the easing of the U.S. dollar against other currencies, with the WSJ Dollar Index falling 1.5% this week.
Corn Craving: About 138,000 metric tons of corn were sold to unknown destinations for delivery in the 2019/20 marketing year, the USDA said. Market participants believe the corn sale is to China, with traders expecting more purchases in the future, AgResource said. "It's expected that China will offer additional duty-free corn import licenses soon," the firm said.
Biofuel Blues: U.S. ethanol production fell to a 21-week low, with grains traders expecting output to slide below 1 million barrels a week as poor margins force makers of the biofuel to shutter their operations. Brazil, a major destination for U.S. ethanol exports, increased its own production by 7.3% as the 2019/20 season nears its end, and industry group Unica said the sugar mills are functioning normally while taking precautions against the new coronavirus.
Heavy Cloud, No Rain: Most Brazilian crop areas have below-normal precipitation forecast over the next five days, according to agricultural weather service DTN. This means crop stress is likely, particularly in southern Brazil where dryness has been most acute, DTN said. It expects Rio Grande do Sul, the third-largest soybean-producing state in Brazil, to harvest its smallest soybean crop in four years.
Coronavirus: China's recovery from the new coronavirus may prove to be at just the right time for U.S. grains exports. "Exports and everything could start to go," said John Payne of Daniels Trading. As China reopens businesses, pent-up demand may emerge, Mr. Payne said. The U.S. could be better placed for exports than Brazil and the European Union, which are struggling with supply-chain issues as the virus that causes Covid-19 spreads.
Oil/Grain Divergence: The recent divergence in agricultural commodity prices and oil prices reveals the relationship between the two isn't as strong as commonly thought, said Capital Economics. The coronavirus has had different effects on the markets. Agricultural production is more labor-intensive than oil, so its supply is more vulnerable to its workforce being forced to remain home. "What's more, virus-related stockpiling is leading to an--albeit temporary--upward pressure on demand for some staple foods," Capital Economics said.
--The USDA will release its latest weekly export sales numbers at 8:30 a.m. ET Thursday.
--The CFTC releases its weekly commitment of traders report at 3:30 p.m. ET Friday.
--The USDA releases its weekly grain export inspections data at 11 a.m. ET Monday.
(Lucy Craymer contributed to this article.)
Write to Kirk Maltais at email@example.com