Wheat Drops as Speculators Step Back -- Daily Grain Highlights
By Kirk Maltais
-- Wheat for March delivery fell 4.3% to $7.87 1/4 a bushel on
the Chicago Board of Trade Tuesday, with commodity traders across
the board pulling back from previous investments amid lingering
Omicron and inflation concerns.
-- Corn for March delivery fell 2.5% to $5.67 1/2 a bushel.
-- Soybeans for January delivery fell 2% to $12.17 1/4 a
Double Whammy: Weakness in crude-oil futures and commodities as
a whole extended into grain futures Tuesday because of Covid-19
variant and inflation concerns.
"WTI crude oil and other commodity markets are selling off this
morning from ongoing concerns over the Omicron after a major drug
company told a newspaper that the existing vaccines are likely less
effective against the latest variant," said Terry Reilly of Futures
Crude-oil prices have been particularly affected by news of
Omicron with WTI light crude closing down 5.4% to $66.18 per
Mass Exodus: Managed money funds were the main driver for the
risk-off approach in grains, with liquidation of long positions
extending from Monday's session into Tuesday.
"Managed funds liquidated to start the week with corn sales
estimated at 10k to drop the net long to 356k, net sellers of 5k
beans to drop the net long to 36k, and net sellers of 8k wheat to
drop the position to short 3k," said Doug Bergman of RCM
Outlooks for more robust production of row crops globally are
also weighing on futures, he added.
Missed Deadline: The apparent delay of the EPA in proposing its
new biofuel mandates may be a factor pressuring corn futures in the
coming days. Traders were expecting the EPA to report its new
guidance Tuesday for biofuel blending rules through 2022.
"EPA did propose an extension in this deadline, but little else
is known about volumes or the timing of publication," said
Adversity Ahead: Although grain traders are liquidating long
positions Tuesday, adverse weather stemming from La Niña may be a
factor lifting grain prices longer term, said Rabobank in its
latest Agri Commodity Markets Outlook report. According to the
firm, La Niña looks to exacerbate drought conditions in the U.S.,
Brazil and Argentina in the upcoming growing season, which along
with other factors such as higher input costs and a snarled supply
chain look to support higher prices.
"There will be no return to pre-pandemic prices in 2022," said
Carlos Mera of Rabobank. "While Covid-19-related disruption will
subside, inflationary pressures and adverse weather will hit
producers, making them unable to significantly expand output."
Applying the Brakes: Analysts surveyed by Dow Jones this week
are forecasting a potential drop in daily production of ethanol in
the U.S. They see daily production landing anywhere from 1.04
million barrels to 1.09 million barrels per day versus 1.08 million
barrels per day reported last week.
Meanwhile, U.S. ethanol stockpiles are expected to have further
upside, landing anywhere from 20.1 million barrels to 20.36 million
barrels from 20.16 million barrels last week.
-- The EIA is scheduled to release its weekly ethanol production
and stocks report at 10:30 a.m. EST Wednesday.
-- The USDA is due to release its monthly grain crushings report
at 3 p.m. EST Wednesday.
-- The USDA is scheduled to release its weekly export sales
report at 8:30 a.m. EST Thursday.
Write to Kirk Maltais at email@example.com
(END) Dow Jones Newswires
November 30, 2021 15:45 ET (20:45 GMT)
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