By Kirk Maltais
--Wheat for May delivery fell 4% to $10.14 1/4 a bushel on the Chicago Board of Trade Tuesday as grain traders were selling off the risk premium attached to grains while Russian and Ukrainian officials met in Turkey.
--Corn for May delivery fell 3% to $7.26 1/4 a bushel.
--Soybeans for May delivery fell 1.3% to $16.43 a bushel.
Talks Resume: CBOT wheat futures remained lower, shedding risk premium as face-to-face talks to end the Russia-Ukraine conflict moved forward in Istanbul. "This appears to be fueling hopes of a possible rapprochement," said Commerzbank. "This is also urgently needed as far as the supply of grains is concerned, as Ukrainian ports that are vital for grain exports have been closed since the beginning of the war." Both sides say that progress has been made, with Russia saying it would limit military operations near Kyiv.
Weather Pressure: In addition to Russian-Ukrainian peace talks, grains were pressured by a wetter weather outlook for U.S. growing areas. "My main concern is a potential wet spring for US corn planting but some easing in the drought from Nebraska to northern Texas for wheat," said Jim Roemer of Best Weather. Mr. Roemer forecasts that La Niña may continue through the spring, which could bring wetter and colder weather to U.S. growing areas. This could delay corn planting in states like Ohio, but will help to ease drought conditions seen in the southern portion of the Midwest.
Stockpile Story: The USDA's quarterly stocks report due out Thursday is expected to show mixed signals in terms of grain stockpiles. Analysts surveyed by The Wall Street Journal forecast that corn and soybean stocks are expected to turn higher - with corn stocks now forecast at 7.89 billion bushels and soybean stocks at 1.89 billion bushels. Both of these figures are higher than forecast by the USDA last month, but are also well lower than the USDA's previous quarterly report. Meanwhile, wheat stocks are seen as declining - forecast at 1.06 billion bushels, down from 1.31 billion bushels forecast by the USDA last month and 1.39 billion bushels reported last year.
Path to New Highs: Although CBOT grain futures fell Tuesday, the fallout from the Russia-Ukraine war and continued strong demand for grains globally will likely push agricultural prices to all-time highs, said Rabo AgriFinance. "We projected U.S. farm prices to be strong this coming year," said Andrick Payen of the firm. "But the Ukrainian conflict is likely to push wheat prices to reach record highs." According to Rabo, a 200 million bushel increase in exports for each commodity would increase the 2022/23 average on-farm price for corn by approximately 13% and wheat by approximately 50%. For wheat, that's enough to push prices above record levels seen in 2012.
Piling Up: U.S. ethanol inventories are expected to stay on the rise in this week's report from the EIA. Analysts surveyed by The Wall Street Journal are forecasting ethanol inventories to rise to anywhere from 26.25 million barrels to 26.45 million barrels, up from 26.15 million barrels reported last week. If the EIA reports results on the high end of analyst estimates, then it'll be the highest they've been since mid-April 2020 - when the initial onset of Covid-19 kept drivers off of the road. Driving stocks higher now are export bans from the Black Sea, which is keeping Russian oil off of the market.
--The EIA will release its weekly ethanol production and stocks report at 10:30 a.m. ET Wednesday.
-The USDA will release its quarterly Hogs and Pigs report at 3 p.m. ET Wednesday.
--The USDA will release its weekly export sales report at 8:30 a.m. ET Thursday.
-The USDA will release its quarterly grain stocks report at noon ET Thursday.
-The USDA will release its annual Prospective Plantings report at noon ET Thursday.
Write to Kirk Maltais at email@example.com
(END) Dow Jones Newswires