By Kirk Maltais
--Wheat for May delivery rose 3.5% to $10.45 1/4 a bushel on the Chicago Board of Trade Tuesday, responding to both record-poor conditions for winter wheat in the U.S. Plains and the specter of more sanctions on Russian exports.
--Soybeans for May delivery rose 1.8% to $16.31 a bushel.
--Corn for May delivery rose 1.2% to $7.59 3/4 a bushel.
Plain Pain: CBOT wheat futures surged, buoyed by record-low crop ratings for U.S. winter wheat. The USDA reported yesterday that winter wheat is in 30% good-or-excellent condition, a record low and well below 53% good-or-excellent at the same time last year. "U.S. hard red wheat ratings are the lowest on record and point to a 10-20% fall in U.S. hard red wheat yields versus trend depending on April/May weather conditions, " said AgResource. As a result, grain traders are focusing on weather forecasts for wheat-growing Plains areas in the coming weeks.
More Sanctions Ahead: Accusations of war crimes perpetrated by Russian soldiers in Ukraine are leading to fresh sanction proposals, which have US grain futures and other commodities moving higher. WSJ says that the EU is considering new sanctions that would include a ban of Russian coal exports. Continued stress on exports coming out of the Black Sea is providing support for grains, particularly wheat. "Ports are closed in Ukraine and Russian shippers and exporters are not offering in part due to sanctions but mostly due to the war and the chance to lose ships," says Jack Scoville of Price Futures Group.
Global Cues: Soybean futures followed wheat, and also reacted to other global issues tightening soyoil availability. An Argentina truckers' union threatening a strike, Black Sea concerns and higher energy markets underpinned global vegetable oils markets, said Terry Reilly of Futures International. "Argentina's national transport federation is demanding the government increase the tariffs on grain producers to reflect the higher costs for fuel."
Dwindling Inventories: Amid the war in Ukraine limiting the amount of grain exports leaving the Black Sea, analysts surveyed by The Wall Street Journal are forecasting inventories of corn and soybeans in both the U.S. and around the world to inch lower in the next WASDE report. They expect U.S. corn stocks to be 1.4 billion bushels and U.S. soybeans stocks to be 254 million bushels. Both of these totals are roughly 30 million to 40 million bushels lower than last month's projections. Meanwhile, world stocks of corn and soybeans are also expected to be down, to 300.7 million metric tons for corn and 88.4 million tons for soybeans -- a 300,000 ton decrease for corn and a 1.6 million ton slide for soybeans.
Surging Stocks: Inventories of ethanol in the U.S. may cross the 27 million barrel mark, which would be the only time other than April 2020 that they've gone that high. Analysts surveyed by Dow Jones forecast that ethanol stocks reported by the EIA this week will total anywhere from 26.61 million barrels to 27.02 million barrels for the week ended April 1 - up from 26.53 million barrels reported last week. While supplies look to be backing up, export demand for U.S. ethanol also appears to be rising - with the Renewable Fuels Association reporting that U.S. ethanol exports grew 16% to 143.1 million gallons, 41% higher than a year ago.
Looking for More: The USDA reported a large sale of corn to China yesterday, totaling 1.08 million metric tons of corn across the 2021/22 and 2022/23 marketing years. This large sale is giving grain traders reason to believe that the USDA will raise its export sales forecast in Friday's WASDE report, as well as optimism that China will soon return to buying more large portions of U.S. corn and other grains. "There are rumors in the market that another 2+ million metric tons of Chinese purchases will be announced by the end of the week," said Tomm Pfitzenmaier of Summit Commodity Brokerage.
--The EIA will release its weekly ethanol production and stocks report at 10:30 a.m. ET Wednesday.
-Conagra Brands Inc. will release its third quarter earnings report before the stock market opens Thursday.
--The USDA will release its weekly export sales report at 8:30 a.m. ET Thursday.
Write to Kirk Maltais at email@example.com
(END) Dow Jones Newswires