By Kirk Maltais
--Wheat for July delivery rose 0.4% to $5.06 1/4 a bushel on the Chicago Board of Trade Wednesday, with traders anticipating Thursday's WASDE report to show less U.S. production and lower world stockpiles.
--Soybeans for July delivery rose 0.3% to $8.65 1/2 a bushel.
--Corn for July delivery fell 0.4% to $3.26 1/4 a bushel.
HIGHLIGHTS
Pre-WASDE Volumes Light: Volumes of grains futures traded on the CBOT Wednesday stayed light, with futures posting little movement ahead of Thursday's monthly WASDE report from the USDA. "A quiet close is anticipated," said AgResource. The research firm said it anticipates that price movement in response to the WASDE will be brief, with grains traders soon returning their focus to weather conditions affecting 2020/21 U.S. crops.
China Buying Anticipated: Reports that a Chinese state export buyer has purchased more U.S. soybean exports have provided a lift for CBOT soybean futures Wednesday. "Talk that China was a buyer of a few U.S. cargoes on the pullback yesterday helped to provide underlying support overnight," said RJO Futures. That support was maintained throughout Wednesday's trading session, although trading has been limited in anticipation for potential surprises from tomorrow's WASDE report by the USDA.
INSIGHT
Record Setting: U.S. ethanol production appears to be quickly bouncing back after the economic pause due to the coronavirus pandemic sank output to a record low. The EIA says that U.S. ethanol production is at a daily rate of 837,000 gallons, a record 72,000-barrel uptick from the previous week. The uptick brings ethanol production back to levels last seen in late March. However, production is still well off historical norms, one reason that corn futures trading on the CBOT were unmoved by the EIA data.
Currency Supports Grains: Currency movements continue to be favorable for U.S. grains exporters--as the Brazilian Real moves higher while the U.S. dollar index on the Intercontinental Exchange trends down for the third straight session. The USD index is now at its lowest level since mid-March, beneficial for U.S. grains exporters hoping to compete for export business. Even so, more attention is being paid to weather conditions in the Corn Belt for just-planted U.S. crops.
Limited Prospects: Grain futures are underwater year-to-date, due largely to coronavirus' squeeze on both export and domestic demand. While the larger U.S. economy appears to be quickly recovering from the stoppage of economic activity in the thick of the pandemic, grains and other commodities are likely to have only a limited upside, said Arlan Suderman of INTL FCStone. "The question now is, how much additional strength does the current economy justify?" Suderman said. "More accurately, since these are futures markets, how much of an additional bounce can traders justify based on expectations of future economic recovery?"
Drop Off: Export sales of soymeal are expected to be weaker than this time last week, according to traders surveyed by The Wall Street Journal. Grains traders estimate that soymeal sales will total anywhere from 100,000 metric tons to 400,000 tons for the week ending June 4. If sales come in on the high side of estimates, they still won't be stronger than last week's total--a reported 583,900 tons sold, according to the USDA. Last week, the USDA reported that the Philippines were the biggest buyer of U.S. soymeal, followed by Libya and Colombia.
AHEAD:
--The USDA will release its latest weekly export sales numbers at 8:30 a.m. ET Thursday.
--The USDA will release its monthly WASDE report at noon ET Thursday.
--The USDA will release its monthly average grains prices report at 3 p.m. ET Thursday.
--The CFTC releases its weekly commitment of traders report at 3:30 p.m. ET Friday.
