By Kirk Maltais


--Soybeans for November delivery rose 3% to $12.90 a bushel, on the Chicago Board of Trade on Thursday, after today's WASDE report from the USDA showed a larger-than-expected cut to soybean production and yields.

--Wheat for December delivery rose 2.8% to $5.71 1/2 a bushel.

--Corn for December delivery rose 1.6% to $4.96 a bushel.


HIGHLIGHTS


Trimmed View: Grain futures on the CBOT turned higher following the release of the USDA's WASDE report, due to cuts to production and yields estimates for corn and soybeans that exceeded the expectations of surveyed analysts. "Today's report was friendly," said Naomi Blohm of Total Farm Marketing in a note after the report's release. The USDA pegs 2023 corn production at 15.06 billion bushels, with a yield of 173 bushels an acre - while soybeans were seen at 4.10 billion bushels and a yield of 49.6 bushels an acre. These figures are lower than expected by analysts surveyed by The Wall Street Journal for both grains - which supported futures in afternoon trading.

Supply Versus Demand: Trader focused more on the USDA's lower revision of production and yield estimates for corn and soybeans than cuts to demand. The USDA reduced corn usage by 50 million bushels to 14.34 billion bushels and cut soybean usage to 4.18 billion bushels, a 23 million bushel decrease. Both declines were largely driven by cuts made to expected export volumes. "It was a supply-friendly versus demand-negative report," said Don Roose of U.S. Commodities.

Black Sea Pressure: Before the WASDE was released, wheat futures found themselves under pressure, with Russia's flow of exports teaming with a strengthening dollar to make U.S. exports uncompetitive. "Demand has been poor for U.S. wheat as Russia production looks strong and exports from Russia have not abated," says Jack Scoville of Price Futures Group in a note. "Ukraine is still exporting, although mostly over land through the EU at higher costs."


INSIGHT


Short-Covering Wave: Although the adjustments made by the USDA in its WASDE were only slightly off from expectations, CBOT grain futures posted a big afternoon rally -- which may continue in upcoming days. "These are not paradigm shifts, but just enough decreases to make some shorts nervous," said Charlie Sernatinger of Marex Capital in a note following the WASDE's release. The cuts were made to production and yield projections, with domestic stockpile figures left unchanged for soybeans and higher for wheat.

Hanging Around: An El Niño climate system is now expected to continue into next spring, said the Climate Prediction Center in a release today. The arm of the National Weather Service said that there's an 80% chance that El Niño will be active in some way through next March. However, these are the odds for a weak system, while the odds for a stronger system altering average ocean temperatures are far smaller-- an only 6% chance in March. A weaker El Niño event can mean colder temperatures in most of the continental U.S., while a stronger event could push temperatures to warmer than normal, said Jim Roemer of Best Weather in a note.

Smaller Ethanol Pile: Total U.S. inventories of ethanol fell for a second week, according to data from the EIA. In its latest weekly report, the EIA said that inventories of ethanol totaled 21.53 million barrels for the week ended Oct. 6. That's a drop of 358,000 barrels from the previous week, exceeding the estimated range between 21.75 million barrels and 21.99 million barrels according to analysts surveyed by Dow Jones. Daily average production also inched lower for the week, at 1.004 million barrels a day. The USDA kept its ethanol consumption for corn at 5.3 billion bushels this year, showing demand issues.


AHEAD


--The USDA will release its weekly export sales report at 8:30 a.m. ET Friday.

--The CFTC will release its weekly commitment of traders report at 3:30 p.m. ET Friday.

--The USDA will release its weekly grains export inspections report at 11 a.m. ET Monday.

--The USDA will release its weekly crop progress report at 4 p.m. ET Monday.


Write to Kirk Maltais at kirk.maltais@wsj.com


(END) Dow Jones Newswires

10-12-23 1528ET