Wheat Futures Higher as Traders Absorb Tighter Forecasts -- Daily Grain Highlights
20 January 2024 - 7:30AM
Dow Jones News
By Kirk Maltais
--Wheat for March delivery rose 1.3% to $5.93 1/4 a bushel, on
the Chicago Board of Trade on Friday, with traders absorbing
building indications of a tighter supply/demand situation.
--Soybeans for March delivery rose 0.04% to $12.14 a bushel.
--Corn for March delivery rose 0.3% to $4.45 1/4 a bushel.
HIGHLIGHTS
Catching Up: A delayed reaction from last week's WASDE and
Grains Stocks report from the USDA lifted wheat Friday. The reports
gave the impression that a tighter supply/demand picture may be in
store for world buyers this year. However, the CBOT ag complex
didn't initially reflect this scenario. "Prices did not reflect
that way obviously, I think that was just from a mass selling
program across all ags/feedgrains," John Payne of Hedgepoint Global
said. Potential winterkill in some U.S. growing areas is also
boosted wheat this week.
South American Focus: Grain traders' focus on growing conditions
in South America returned Friday after taking a lesser role in
recent sessions. "Operators remain vigilant regarding the South
American situation in terms of yields for crops currently being
harvested in Brazil, and the state of crops in Argentina following
the finalization of sowings," AgriTel said in a note. Traders
continue to monitor forecasts there, which show heavy rain arriving
in many areas over the weekend.
Fresh Exports: The USDA reported a fresh flash sale of 297,000
metric tons of soybeans to China. The announcement comes after the
agency's weekly export sales report showed soybean sales on the
high end of analyst forecasts. The fresh sales come as analysts and
traders have mulled over what would be needed in order to spur
short-covering for grain futures viewed as oversold. "The market is
in the process of correcting from oversold with room to trade
higher as that happens," said Doug Bergman of RCM Alternatives in a
note.
INSIGHT
Poking Along: The substantial short-covering expected by traders
this week has yet to materialize. For corn, the reason behind it is
questions about available supply meeting what's characterized as
weak demand. "Ideas of weak demand are keeping prices low," Jack
Scoville of Price Futures Group said in a note. "The market feels
that there is more than enough corn for any demand." Export sales
reported by the USDA Friday were stronger than in previous weeks,
but still failed to motivate excitement among traders.
New Shorts: The CFTC's latest Commitment of Traders report, due
at 3:30 p.m. Eastern time, is expected to show building short
positions in grains through the week ended Jan. 16, Joel Karlin of
Ocean State Research said. "The trade is expecting this afternoon's
COT report to show funds added to what already are large short
positions in corn and wheat and, having liquidated recent longs in
beans and meal, are probably now short those markets also," Karlin
said. Traders and analysts have been expecting prices to show a
strong turnaround given the large short positions in grains, but
that has yet to occur.
AHEAD
--The USDA will release its weekly grains export inspections
report at 11 a.m. ET Monday.
--The EIA will release its weekly ethanol production and stocks
report at 10:30 a.m. ET Wednesday.
-The USDA will release its monthly Cold Storage report at 3 p.m.
ET Wednesday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
January 19, 2024 15:15 ET (20:15 GMT)
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