By Kirk Maltais
--Wheat for July delivery fell 2.7%, to $6.05 3/4 a bushel, on the Chicago Board of Trade on Wednesday, in reaction to cheaper European exports rumored to be coming to U.S. shores, as well as indications of improving weather for U.S. wheat crops.
--Soybeans for July delivery rose 0.1% to $13.24 1/2 a bushel.
--Corn for July delivery rose 1.8% to $5.88 a bushel.
HIGHLIGHTS
Cheaper Alternatives: Rumors that the U.S. is receiving imports of wheat from cheaper European sources continued to be a source of pricing pressure today. "Wheat is lower on chatter of U.S. wheat imports off the east coast and Black Sea competition," said Terry Reilly of Futures International in a note. These exports are expected to be from Germany and Poland. Exports of wheat coming from Russia and Europe have long been more competitive price-wise versus the U.S., putting pressure on U.S. wheat prices.
Watering the Plants: In addition to indications of cheaper imports coming from Europe, word of more rainfall coming to parched growing areas - which may prove helpful to both spring and winter wheat - helped keep a lid on prices. "I think that the recent rains in the southern and central Plains has at least stabilized hard red winter wheat conditions - and in some areas where the crop was not that advanced maybe some yield improvements can be seen," said Joel Karlin of Ocean States Research.
Not For Everyone: The weather outlook is seen as helpful to U.S. wheat crops, but not U.S. corn crops. Growing areas for corn in the U.S. are expected to turn dry, which comes as most of the U.S. crop is already in the ground. While analysts caution that it's early to project damage done to the corn crop, traders are adding premium back to futures to cover for the possibility of heat damage. "Those big yield ideas are going to be impossible to reach unless this pattern breaks soon," said Sterling Smith of AgriSompo.
INSIGHT
Eyes on Washington: The back-and-forth over raising the U.S. debt ceiling has grain traders taking a risk-off stance, especially ahead of the Memorial Day holiday weekend. "The debt ceiling impasse leads to worry for the U.S. economy and a bearish reaction of the financial markets should the U.S. default," said AgResource in a note. The talks remain deadlocked as of late Wednesday.
Net Negative: Export sales of U.S. grains may be bogged down in this week's report, according to analysts surveyed by The Wall Street Journal. They are forecasting that total export corn sales for the week ended May 18 may result in a net reduction of 400,000 metric tons, while soybean sales may have a reduction of as much as 50,000 tons. U.S. export demand has been seen as tepid in recent weeks, and the USDA has announced flash cancellations by China this month.
Back Tracking: Ethanol inventories in the U.S. have fallen to their lowest level in six months in a decline exceeding analyst projections, according to the EIA. In the latest weekly report, the EIA said ethanol inventories through the week ended May 19 totaled 22.04 million barrels - down over a million barrels from last week's total of 23.19 million barrels. It's the lowest inventories have been since November 2022, according to EIA data. Analysts surveyed by Dow Jones this week had forecast inventories to land anywhere from 22.95 million barrels to 23.14 million barrels.
AHEAD
--The USDA will release its weekly export sales report at 8:30 a.m. ET Thursday.
--The USDA will release its monthly livestock slaughter report at 3 p.m. ET Thursday.
--The CFTC will release its weekly commitment of traders report at 3:30 p.m. ET Friday.
--The USDA will be closed Monday in observance of Memorial Day, reopening on Tuesday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
05-24-23 1535ET
