By Kirk Maltais
--Soybeans for July delivery fell 2.3% to $15.85 1/4 a bushel on the Chicago Board of Trade Monday as traders expect forthcoming USDA data may illustrate a less dire situation than previously anticipated.
--Corn for July delivery fell 1.6% to $7.72 a bushel.
--Wheat for July delivery rose 1.4% to $10.92 3/4 a bushel.
HIGHLIGHTS
Brightened Skies: Grain futures fell today with weather in crop-growing areas seen as supportive for planting over the weekend into this week. "U.S. weather appears to be on track to favor spring plantings while parts of the southern and western Great Plains will see additional net drying that could impact winter wheat production potential," said Terry Reilly of Futures International in a note. Traders spent the day anxiously awaiting the USDA's Crop Progress report this afternoon, providing the market with an update on how well things went this weekend.
Getting Into Position: In addition to the possibility that farmers may be able to take a big step in catching up on planting this week, traders are also looking at Thursday's WASDE report as an indicator of how much risk premium has been priced into futures -- and if there's any more room for higher prices. "We are expecting stocks/use ratios below 10% for both corn and soybeans -- those are fundamentally tight levels," Jake Hanley of Teucrium Trading told the WSJ. "Yet, the bullish scenario may already be fully priced in."
Bigger Picture: A lot of the pressure seen in agricultural commodities was similar to factors pulling equities and overall commodities down. "Fear has really taken hold in the investment community and investors are liquidating both commodity and equity positions moving to the sidelines and trying to figure out where prices and the economy are going to go from here," said Tomm Pfitzenmaier of Summit Commodity Brokerage in a note. Last week, the Federal Reserve voted to raise interest rates by 50 basis points, the largest rate hike in over 20 years.
INSIGHTS
Minor Changes: The USDA's next WASDE report is the first look into the USDA's outlook for crop balance sheets in the 2022/23 marketing year. Grain traders say that they have little expectation that the USDA will post dramatically reduced figures for the crop year, even with the weather difficulties reported by farmers so far in planting season. "With the USDA unlikely to deviate significantly from their trend yields, new crop ending stocks of corn, beans, and wheat in the US and globally are likely to be relatively comfortable," said Doug Bergman of RCM Alternatives in a note. He added that such results in the report will likely signal a retreat in futures.
Mixed Messages: The WASDE report is expected to show an uptick in U.S. wheat production forecast for the 2022/23 marketing year - with total wheat seen at 1.79 billion bushels, up from 1.65 billion bushels in 2021/22. This is primarily due to a stronger spring wheat crop, with winter wheat expected to total 1.25 billion bushels - down 32 million bushels from the previous year. Some wheat planting areas have gotten better weather in the past week, but other areas like southwestern Kansas are grappling with extreme drought. "Much of southwest Kansas has gone nearly 300 days without an inch of precipitation," said Marsha Boswell of the Kansas Wheat Commission. Dry soil as well as high input costs are expected to prevent many farmers from harvesting their winter wheat crop.
AHEAD:
--The EIA will release its weekly ethanol production and stocks report at 10:30 a.m. ET Wednesday.
--The USDA will release its weekly export sales report at 8:30 a.m. ET Thursday.
-The USDA will release its monthly world supply and demand report at noon ET Thursday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
05-09-22 1555ET
