By Kirk Maltais
--Corn for December delivery fell 6.8% to $5.86 1/2 a bushel on the Chicago Board of Trade Tuesday, with the WASDE report from the USDA failing to provide any surprises to shock traders out of their selling patterns.
--Wheat for September delivery fell 4.9% to $8.14 1/4 a bushel.
--Soybeans for November delivery fell 4.4% to $13.43 a bushel.
HIGHLIGHTS
Foot on the Gas: Grain futures stepped up selling following the release of this afternoon's WASDE report, which showed higher ending stocks than previously expected for corn and soybeans. Global stocks were also reported higher than expected, which fueled fund selling post-report. "Numbers bearish across the board with U.S. and global stocks for corn, beans and wheat coming in above the average guess in nearly every category," said Doug Bergman of RCM Alternatives in a note following the report's release. "Fund liquidation continues to be a feature with the market not focused on any weather problems at the current time."
Stuck on Course: Tuesday's WASDE report from the USDA did little to change what was a dour mood among CBOT traders--with the numbers revealed by the USDA falling generally close to analyst and trader expectations. "I think the market already showed its hand before the report," Jason Britt of Central States Commodities told the WSJ, explaining that a major surprise was needed out of the report to jolt futures out of negative territory--one that did not materialize.
Big Picture: For the day, the weakness seen in markets across the board--with oil closing down 7.9% and the U.S. dollar index staying flat after running up over the past month--prevailed as the key source for pressure on grains. While these conditions had grain traders paring their risk, focus is expected to shift quickly away from the report after its release and back to the weather outlook for the U.S. Corn Belt--which may lift futures. "The odds of dire flash drought are rising sharply across the Plains and Western Midwest, where days of extreme heat and limited rainfall will quickly draw down soil moisture," said AgResource in a note.
INSIGHTS
Steady Eddy: Monday afternoon's weekly Crop Progress report from the USDA showed an unchanged good-excellent rating for U.S. corn at 64%, with soybeans down 1 point to 62% good-or-excellent. Spring wheat posted a 4-point rally, making that crop now 70% good-or-excellent. For soybeans and wheat, this year's crop so far is looking better than it was at this point last year--while corn is off only 1 point from last year's good-excellent rating. Traders are eyeing this report to see if forecasts of hot weather will translate into a sizable shift in crop conditions.
Three Years Running: Meteorologists are now expecting a La Niña climate system to continue into next year, which would make it the third consecutive year with an active La Niña. If this does take place, it'll be the first three-year stretch of the climate condition since 1999-2001, according to Joana Colussi and Gary Schnitkey of the University of Illinois. "La Niña tends to create drought and dry conditions in many parts of the world, including southern Brazil, Argentina and the U.S., while bringing additional precipitation to other areas, such as across northern Brazil," they said in a report published this week. While the effect on yields in the U.S. appears minimal, in South America the impact appears larger--particularly in Argentina.
AHEAD:
--The EIA will release its weekly ethanol production and stocks report at 10:30 a.m. ET Wednesday.
--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.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
07-12-22 1502ET
