By Kirk Maltais


-- Wheat for March delivery fell 1.6% to $6.32 1/4 a bushel on the Chicago Board of Trade on Friday after the USDA revised its outlook for U.S. wheat exports 25 million bushels higher, which didn't come as a surprise to traders.

-- Soybeans for January delivery fell 0.4% to $13.06 1/4 a bushel

-- Corn for March delivery fell 0.3% to $4.86 3/4 a bushel.


HIGHLIGHTS


Drifting Lower: The USDA increased its outlook for U.S. exports of both corn and wheat, raising both by 25 million bushels in its WASDE report.

The increased export demand wasn't enough to lift CBOT futures, in part because higher export sales have already been priced in throughout the week, said Mike Zuzolo of Global Commodity Analytics in a note. The export increase for corn was also expected, although the USDA officially projecting it may spark a rally late in trading due to the sizable short position held by fund traders, he added.


Minor Changes: The USDA made only slight adjustments to its outlook for 2023-24 soybean production in South America, cutting expected output in Brazil by 2 million metric tons while leaving Argentina's production estimates unchanged.

The lack of big changes underwhelmed traders who have been closely watching precipitation levels in South America as farmers planted.

"Once focused on South American production, the sentiment for the December report shifted to U.S. wheat," said Terry Reilly of Marex, referencing the 25 million-bushel cut the USDA made to U.S. ending stocks.


INSIGHT


Uneasy Balance: While fund traders have been carrying large short positions in corn and wheat, farmers have been taking long positions, resulting in a wobbly balance keeping a lid on the movement of grain futures.

"This is still all about a short spec versus a long U.S. farmer, and the sideways price action is telling you that no one is winning yet," said Charlie Sernatinger of Marex in a note.


Back to Buying: After a brief pause, the USDA announced a new flash sale of 110,000 metric tons of soft red winter wheat to China for delivery in the 2023-24 marketing year. China also purchased 136,000 tons of 2023-24 soybeans, and 165,000 tons of corn were sold to unknown destinations.

CBOT wheat has been on the rise since the wave of Chinese export purchases began, with traders anticipating the reduction in ending stocks the USDA forecast in the WASDE report.


AHEAD


-- The USDA is scheduled to release its weekly grains export inspections report at 11 a.m. EST Monday.

-- The EIA is due to release its weekly ethanol production and stocks report at 10:30 a.m. EST Wednesday.

-- The USDA is scheduled to release its weekly export sales report at 8:30 a.m. EST Thursday.


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


(END) Dow Jones Newswires

12-08-23 1543ET