By Kirk Maltais
-- Soybeans for March delivery fell 1.2%, to $15.20 1/4 a bushel, on the Chicago Board of Trade on Wednesday, with traders maintaining a risk-off attitude throughout the day ahead of the Federal Reserve's decision on interest rates.
-- Wheat for March delivery fell 0.4% to $7.58 a bushel.
-- Corn for March delivery rose 0.2% to $6.81 a bushel.
HIGHLIGHTS
Pressure Cooker: Grain futures spent much of the day under pressure. For corn, soybeans and wheat, profit-taking was seen as the primary factor weighing down prices.
"Much of what we are seeing today is simple profit-taking," Karl Setzer of Mid-Co Commodities told WSJ. "The U.S. is again overpriced in the global market on corn and wheat which is also negative."
Mr. Setzer adds that competition from Brazil is a factor pressuring soybean prices.
Reactive: Grain futures pared their losses from earlier in the day after the Federal Reserve confirmed that it raised interest rates by a quarter point this month, slowing down the Fed's push of rates to quell inflation. After the Fed confirmed the increase and that more increases are likely coming, grain futures have cut into the steeper losses in futures recorded earlier Wednesday.
"The tone at this very moment is that the Fed is close to being done, and that maybe one more [quarter-point] hike will be it as long as inflation continues to trend lower," Sterling Smith of AgriSompo told WSJ.
INSIGHT
Higher Stakes: StoneX Group raised their production outlook for Brazilian crops Wednesday, now estimating the Brazilian soybean crop at 154.2 million metric tons, versus a previous estimate of 153.8 million tons and the USDA estimate of 153 million tons in its last WASDE report.
For corn, StoneX now forecasts production of 129.9 million tons, up from its previous estimate of 128.7 million tons and the USDA's forecast of 125 million tons.
The soybean number is of particular interest to traders, said Mike Castle of StoneX in a note. "If realized, this would be a new all-time record crop for Brazil, and would also represent a 19.1% increase from last year's crop," he says.
Demand Questions: Many grain traders set their sights toward Thursday's export sales report from the USDA. Traders surveyed by The Wall Street Journal forecast sales to be similar to last week's level.
Even so, some traders are anticipating a weak report, with the Brazilian crop expected to be more in demand.
"The bulls are hopeful for another large week of U.S. corn, soybean and soymeal sales tomorrow, but with much of Asia on holiday last week, [we are] doubtful," says AgResource in a note. "U.S. export sales will be slow from February through July while shipments are likely to stay tepid well into the new-crop position."
AHEAD
-- The USDA is scheduled to release its weekly export sales report at 8:30 a.m. EST Thursday.
-- The CFTC is due to release its weekly Commitments of Traders Report at 3:30 p.m. EST Friday.
-- The USDA is scheduled to release its weekly grains export inspections report at 11 a.m. EST Monday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
02-01-23 1540ET
