By Kirk Maltais
--Wheat for December delivery declined 2.1% to $8.27 3/4 a bushel on the Chicago Board of Trade Tuesday, leading grains lower as traders spare any broader moves for Wednesday's WASDE report.
--Corn for December delivery fell 1.2% to $6.67 1/2 a bushel.
--Soybeans for January delivery was down 0.3% at $14.46 1/2 a bushel.
HIGHLIGHTS
Waiting for the Main Event: The upcoming WASDE report from the USDA kept traders generally playing it safe in trading Tuesday. However, early indicators of what next year's crop may look like are already giving traders the sense that U.S. crop sizes may bounce back next year, with the USDA's Early Baseline's report released late Monday showing 2023 corn acreage at 92 million acres with a yield of 181.5 bushels per acre, and soybean acreage at 87 million acres at 52 bushels per acre.
A Shot in the Arm: Confirmation of a new round of flash export sales by the USDA this morning didn't totally bail the grains complex out of its move lower, but did mitigate how low they went, particularly for soybeans. The USDA says that 338,600 metric tons of corn were sold to Mexico for delivery in the 2022/23 marketing year, and 144,000 tons of soybeans were sold to Mexico for 2022/23, along with 138,700 tons of soybeans that were sold to China for 2022/23, and 132,000 tons of soybeans sold to unknown destinations for 2022/23. After the USDA published its notice, grains immediately pared pre-market losses, with wheat briefly turning higher.
INSIGHTS
Finding Normalcy: Farmers attempting to take advantage of high prices for grains by planting more in the upcoming growing season may result in the ag complex easing off of the high levels they have traded at in the past year, said Craig Turner of Daniels Trading. In a note, Turner highlights the USDA's estimates for corn next year--with planting seen at 92 million acres with a yield of 181.5 bushels per acre, both up from last marketing season--as an example. "This implies corn could be $5 or lower this time next year," said Mr. Turner. "My big takeaway is the bull market for grain and oilseeds will eventually subside and we'll have lower pricing in the next year or two, but I don't see the U.S. going back to previous lows."
Not Enough to Go Around: Even with easing prices in recent months, it has become harder to get fertilizer around the globe, said Gro Intelligence. In a partnership with the Gates Foundation, the International Fertilizer Association, and the CRU Group, the agencies forecast that fertilizer shortages may cause anywhere from 143 trillion calories to 216 trillion calories less of food to be produced. Ukraine looks to see the biggest drop-off in food production, with the amount of calories grown there expected to fall anywhere from 22% to 42%. In its latest assessment, DTN says that retail fertilizer prices are mostly trending lower in the U.S., although they remain at historically high levels.
Fast Rate: The harvest of U.S. crops planted this spring is nearing completion, the USDA reported in its weekly Crop Progress report Monday afternoon. The corn harvest is now 87% complete, while the soybean harvest is 94% done, said the USDA. Both of these figures are ahead of the five-year average, and are above where they were at this time last year. Other harvests, such as the cotton harvest, are also ahead of both where they were last year and the five-year average.
AHEAD:
--The EIA will release its weekly ethanol production and stocks report at 10:30 a.m. ET Wednesday.
--The USDA will release its monthly world supply and demand report at noon ET Wednesday.
--Beyond Meat Inc. will release its third-quarter earnings report on Wednesday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
11-08-22 1556ET
