Soybeans Sink Following USDA Report -- Daily Grain Highlights
01 October 2022 - 5:17AM
Dow Jones News
By Kirk Maltais
--Soybeans for November delivery fell 3.2%, to $13.66 a bushel,
on the Chicago Board of Trade on Friday, dropping following the
release of the USDA's quarterly stocks report, which showed
higher-than-expected old-crop stocks of soybeans.
--Corn for December delivery rose 1.3%, to $6.77 3/4 a
bushel.
--Wheat for December delivery rose 3%, to $9.24 3/4 a
bushel.
HIGHLIGHTS
Negative Indicator: The USDA raised its expectations for U.S.
old-crop soybean stocks in its quarterly report, which sent
soybeans down midday. The uptick in soybean stocks shows a slowdown
in the flow of soybeans out of the Midwest, Charlie Sernatinger of
ED&F Man Capital told The Wall Street Journal. "The main topic
of conversation is that the river bids for beans are below Trump
trade war lows with the barge problems on the river, with no rains
for the Mississippi River in the forecast for the next two weeks at
least," said Mr. Sernatinger. "Beans are backing up in the
country."
Surprise Stats: In its Quarterly Stocks report, the USDA said
that old-crop corn stocks are totaling 1.38 billion bushels, and
wheat stocks totaled 1.78 billion bushels. For corn and wheat, the
figures are below the expectations of analysts surveyed by the
Journal this week. The USDA also released its 2022 small grains
summary report, which showed that U.S. wheat acres fell 4% to 35.5
million acres. As a result, wheat futures led gains on the exchange
today.
Up in Arms: Before the report's release, Russia's annexation of
some regions of Ukraine was the main driver for trading, with the
move escalating the tensions and stakes of the conflict between the
two nations. "Grains are supported by rising tensions between
western countries and Russia after the annexation in Ukraine," said
Terry Reilly of Futures International in a note. The annexations
are predicated on referendums dismissed by western nations and
Ukraine as a sham.
INSIGHTS
Deal Politics: With the USDA quarterly stocks report seemingly
showing smaller-sized crops than previously reported, attention is
turning towards what happens with the grain export corridor deal in
the Black Sea. Particularly, if Russia pulls out of the deal then
grain prices will likely surge, John Payne of Hedgepoint USA told
the Journal. "Things longer term depend on the grain corridor,"
said Mr. Payne. "If Russia makes a move on Odessa and says no more
grain is leaving, I think corn is likely to see the level needed to
shut off ethanol demand here in the US."
Slimming Margins: Margins for ethanol production have become
less attractive in late September, said Marex in a note. The firm
estimates that through the end of September, ethanol margins have
slipped to between six to eight cents per gallon. That's down from
nearly as high as 20 cents a gallon in late August, according to
Marex. "Among the many excuses heard for slowing production are
logistical problems amid the rail strike scare, high corn basis
levels, enzyme issues slowing the production process due to heat,
and maintenance taking longer than usual amid parts shortages,"
said the firm.
AHEAD:
--The USDA will release its weekly grains export inspections
report at 11 a.m. ET Monday.
--The USDA will release its monthly grain crushings report at 3
p.m. Monday.
--The USDA will release its weekly crop progress report at 4
p.m. ET Monday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
September 30, 2022 15:02 ET (19:02 GMT)
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