By Kirk Maltais
--Wheat for December delivery rose 2.1% to $5.64 a bushel on the Chicago Board of Trade on Tuesday, hitting a more than four-month high in reaction to weather concerns and a weak U.S. dollar.
--Soybeans for November delivery rose 0.1% to $9.54 3/4 a bushel.
--Corn for December delivery rose 0.1% to $3.58 a bushel.
HIGHLIGHTS
Contract High: Dry weather in the U.S. Great Plains helped boost the front-month wheat contract to its highest close since April 13. The spring wheat harvest is 69% complete, according to the USDA, but traders are concerned that the yields may be smaller than anticipated. In last month's WASDE report, the USDA raised its yield forecast to 50.1 bushels per acre.
Weak Dollar Upside: The U.S. dollar continued to slide against other currencies, making U.S. grain exports a bit more attractive to buyers. "The dollar index fell to fresh 28-month lows earlier today, probing below trend line support on the charts from the 2011 and 2014 lows," said Arlan Suderman of StoneX. "Where it goes from here will influence sentiment on future commodity inflation expectations." Since June 1, the dollar index on the Intercontinental Exchange has shed 6.1%.
Corn Can: Monday's crop progress report showed a two-point drop in the percentage of U.S. corn in good or excellent condition, falling to 62%. Corn futures eased and then recovered, eking out a small gain at the close. "The corn market may have priced in the damage from the wind storm and the hot/dry conditions with traders reaching the conclusion that the crop has matured sufficiently to not be hurt by the weather as had previously been thought," said Tomm Pfitzenmaier of Summit Commodity Brokerage.
INSIGHTS
Yields Stay Large: StoneX lowered its estimates for U.S. corn and soybean yields, expecting corn to average 179.6 bushels per acre and soybeans at 52.9 bushels per acre. These are still within the range of the USDA's last assessment and last month's assessment from Pro Farmer following its tour of seven crop-growing states, StoneX's Matt Zeller said. Grains traders saw StoneX's latest assessment as underwhelming. "The StoneX crop estimates were generally bearish and if correct, would argue for a complete retracement of late August rally," AgResource said. "The industry is trading yield numbers that are far less than the StoneX forecasts."
Healthy Demand: An additional 596,000 metric tons of U.S. corn have been sold to China for delivery in the 2020/21 marketing year, and 132,000 tons of soybeans were sold to unknown destinations for 2020/21, the USDA said. That makes it 1.19 million tons of corn sold to China so far this week alone, reinforcing the sentiment that export demand for U.S. corn is strengthening.
AHEAD
--The EIA releases its weekly update on ethanol production and inventories at 10:30 a.m. ET Wednesday.
--The USDA will release its latest weekly export sales numbers at 8:30 a.m. ET Thursday.
--The CFTC releases its weekly commitment of traders report at 3:30 p.m. ET Friday.
Write to Kirk Maltais at kirk.maltais@wsj.com
