By Kirk Maltais
-- Wheat for May delivery fell 2.3% to $6.02 1/2 a bushel on the Chicago Board of Trade Monday, losing momentum after starting the day strong as traders opted to lock in profits.
-- Corn for May delivery fell 1.6% to $4.53 1/4 a bushel.
-- Soybeans for May delivery fell 0.4% to $11.96 1/4 a bushel.
HIGHLIGHTS
Reversing Course: Wheat futures showed strength last week, but it looks as if traders opted to lock in some profits as uncertainty around the war in Iran keeps building.
"Wheat was up sharply to start the night session, but fell off hard on profit-taking and bad gamma trading," said Charlie Sernatinger of Marex in a note. Export demand is being impacted by the gridlock in the Strait of Hormuz, he said, this while rainfall is expected in the U.S. Plains this week, beneficial for the winter wheat crop.
Early Push: Early strength in grains came from the rally in crude oil over the weekend, which rose to over $100 a barrel and to its highest since 2022.
Mojtaba Khamenei assuming the supreme leader title of his father Ali Khamenei over the weekend lifted crude oil, and grains caught support because of their usage as feedstock for renewable fuels. This eventually gave way to profit-taking that sent grains lower and pared huge gains in energy futures.
INSIGHT
Stifled Flow: The closure of the Strait of Hormuz has already impacted U.S. farmers, said Harry Ott, head of the South Carolina Farm Bureau and a farmer of cotton, corn and peanuts in Calhoun County, S.C.
Ott said during a press conference for the American Farm Bureau Federation on Monday that he hasn't secured all of the fertilizer he needs. That local supplier isn't willing to sell him more until the situation at the Strait "shakes out," Ott said. "He told me he had to wait and see what his boss told him before he could start selling, to see how high fertilizer prices are going."
Fertilizer is a major expense for farmers planting this spring.
Looking Long: Friday's Commitments of Traders Report from the CFTC showed that traders piled into grain futures for the week ended March 3, growing the net long position held in these grains by traders.
Corn showed the most dramatic move for the week, with traders adding over 24,000 long contracts while reducing their short positions by nearly 43,000 contracts. Soybean futures added nearly 22,000 long contracts for the week.
This report covers the early reaction to the onset of the U.S.-Iran conflict, with analysts saying that they expect to see the trend of growing long positions to continue in the coming weeks.
Shifting the Playing Field: An expected shift in the world's climate away from La Niña and toward a neutral condition may add to the uncertainty that is driving up grain futures at present.
"Historically, years of climate transition can present greater production volatility," said analysts with Hedgepoint Global in a note. "An often-cited example is 2012, when the transition from La Niña to a neutral climate brought adverse weather conditions in the U.S., causing significant losses in corn and soybean crops." Excessive rainfall is a factor pressuring the development of soybeans in northern regions of Brazil, something that U.S. lands could potentially see. A shift toward an El Niño system this fall could introduce further weather issues.
AHEAD
-- The USDA is scheduled to release its monthly WASDE report at noon EDT Tuesday.
-- The EIA is due to release its weekly petroleum status update report at 10:30 a.m. EDT Wednesday.
-- The USDA is scheduled to release its weekly export sales report at 8:30 a.m. EDT Thursday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
03-09-26 1556ET
