Wheat Slides as Traders Rebalance Portfolios – Daily Grain Highlights

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By Kirk Maltais

 

–Wheat for March delivery fell 1.2% to $7.60 3/4 a bushel on the Chicago Board of Trade Wednesday amid efforts by fund traders to rebalance their portfolios.

–Corn for March delivery fell 1.2% to $6.02 1/4 a bushel.

–Soybeans for March delivery rose 0.4% to $13.94 3/4 a bushel.

 

HIGHLIGHTS

 

Losing Streak Continues: Wheat futures on the CBOT led the way lower for agricultural futures on technical selling amid rebalancing by fund managers, according to grain traders. For wheat, Wednesday marks the sixth session in the last eight that futures finished lower. The contract slid 6.8% in that time. Additionally, China’s plans to sell 500,000 tons of wheat from state reserves to flour millers there are also pressuring US futures.

In Limbo: Many traders believed that positive momentum would set in today, but it didn’t materialize amid evidence of a divide in trader sentiment across the market, said Arlan Suderman of StoneX. “The grain markets seem a bit stuck between the bulls trying to push weather concerns and the bears citing adequate production anyway – similar to what happened in the 2021 US growing season,” said Mr. Suderman. Grain futures climbed yesterday as fund traders seized on the outlook for adverse weather for South American crops and bought into futures.

 

INSIGHTS

 

Eye on Demand: While next week’s WASDE report from the USDA will show the latest adjustments to the agency’s projections for production and stockpiles, “trade will be more focused on demand to see if any alterations are made there,” said Karl Setzer of AgriVisor. “U.S. exports have been solid on corn and soybeans which may prevent any slippage on that use. Wheat sales have been less than hoped for though and to see a decrease in yearly projections would not come as a surprise.”

Beating Expectations: Stocks of ethanol in the U.S. jumped to their highest level since mid-August. The EIA said that for the week ended December 31, ethanol inventories totaled 21.36 million barrels, up from last week’s total of 20.68 million barrels. Analysts surveyed by Dow Jones this week forecasted inventories to be anywhere between 20.53 million barrels to 20.98 million barrels this week. The EIA pegged daily production at 1.05 million barrels per day, which is down from 1.06 million barrels reported last week. Analysts had forecast daily production to be anywhere from 1.05 million barrels to 1.07 million barrels.

Holiday Slump: The USDA will release its weekly export sales report on Thursay, covering sales for the week ended Dec. 30 which are expected to fall off from already soft sales reported in the previous week, according to grain traders surveyed by The Wall Street Journal. Corn sales are expected to total from 500,000 metric tons to 1.1 million tons, while soybean sales are expected between 300,000 tons to 900,000 tons and wheat sales are expected between 150,000 tons to 400,000 tons.

 

AHEAD:

 

–The USDA will release its weekly export sales report at 8:30 a.m. ET Thursday.

–The CFTC will release its weekly commitment of traders report at 3:30 p.m. ET Friday.

-The USDA will release its weekly grains export inspections report at 11 a.m. ET Monday.

 

Write to Kirk Maltais at kirk.maltais@wsj.com

 

(END) Dow Jones Newswires

January 05, 2022 15:27 ET (20:27 GMT)

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