Corn Futures Slide After WASDE Shows Higher Output and Stocks -- Daily Grain Highlights
13 January 2024 - 7:27AM
Dow Jones News
By Kirk Maltais
--Corn for March delivery fell 2% to $4.48 1/2 a bushel, on the
Chicago Board of Trade on Friday, tumbling after the USDA forecast
higher-than-expected production and inventories for 2023/24
crop.
--Wheat for March delivery fell 1.1% to $5.96 1/2 a bushel.
--Soybeans for March delivery fell 0.8% to $12.25 3/4 a
bushel.
HIGHLIGHTS
Lesser Stress: U.S. grain outlooks for the 2023/24 marketing
year showed a "comfortable" supply-and-demand situation, Doug
Bergman of RCM Alternatives said in a note following the release of
the USDA's WASDE report. The fresh estimates pared concerns about
crop stress over the past year. The more-relaxed supply situation
means that next season's crop has more room to handle weather
issues, Bergman said. "Weather will still need to cooperate this
growing season, but going into the marketing year, supplies are
forecast at comfortable levels across the board," he said. The USDA
said it sees U.S. corn supplies rising more than use, prompting the
agency to raise its ending-stocks forecast by 31 million
bushels.
Not Quite Enough: The WASDE showed mostly larger production and
stock figures for U.S. grains, but a separate report from the
agency said acres of winter wheat seeded were expected to total
34.4 million acres, a 6% drop from the previous year. Even so,
analysts said the results weren't enough to buoy futures. "The
wheat got a bullish planted acreage number, but the market is
looking at the bigger Black Sea production numbers, and the
increase in world stocks," said Charlie Sernatinger of Marex in a
note.
INSIGHT
Hot Zone: Attacks launched by the U.S. and the U.K. against
Houthi rebels in Yemen are likely to fan the conflict in the Red
Sea, creating risk for supply chains running out of the area.
Heading into a three-day weekend, fund traders who were largely
short in grains attempted to prevent exposure to the Red Sea risks
while the market is closed. The WASDE release reversed that
momentum, but further Middle East military action may add a greater
risk premium to grains. "The rebel Houthis vowed additional terror
and an increase in Red Sea ship attacks… and indicated that all
U.S./UK interests are now legitimate targets," AgResource said in a
note.
Low Balling: Traders and analysts are wondering how low grains
future prices can go. For corn, current levels of may sink 15 to 30
cents a bushel more, John Payne of Hedgepoint Global said. "I think
the new crop September and December contracts are closer to a low
than you would think, just based on the idea the price pencils
pretty well for the feeder guys -- and if ethanol stays profitable
they are buying too." Soybeans could drop to roughly $11.50 a
bushel, Payne said.
AHEAD
--The USDA and the CBOT will be closed in observance of Martin
Luther King Jr. Day on Monday, reopening on Tuesday.
--The USDA will release its weekly grains export inspections
report at 11 a.m. ET Tuesday.
--The EIA will release its weekly ethanol production and stocks
report at 11 a.m. ET Thursday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
January 12, 2024 15:12 ET (20:12 GMT)
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