Wheat Futures Slide as USDA Raises Output Estimate — Daily Grain Highlights

By Kirk Maltais

--Wheat for July delivery fell 1.9% to $6.14 1/2 a bushel, on the Chicago Board of Trade on Wednesday, staying down as the USDA forecasts an uptick in U.S. wheat production--although not as big of an uptick as forecast by analysts.

--Soybeans for July delivery fell 0.1% to $11.77 1/4 a bushel.

--Corn for July delivery rose 0.8% to $4.53 1/4 a bushel.

HIGHLIGHTS

Winter Windfall: Hard red winter wheat production is more than offsetting reduced soft red winter and white winter crops in the U.S., the USDA said in its latest WASDE report on Wednesday. The agency raises its estimate for the 2024/25 U.S. wheat crop to 1.88 billion bushels from 1.86 billion bushels in May. The USDA also sees greater exports, with U.S. wheat prices becoming more competitive amid reduced exportable Black Sea supplies.

Changing Pace: The WASDE report provided little new information on U.S. crops, which turned the focus of grain traders back to weather patterns over the next few weeks. "Today's report seemed like the USDA would rather kick the can down the road in terms of production updates to instead see if Mother Nature would be the catalyst for change for the July 12 WASDE report," Total Farm Marketing's Naomi Blohm said. In its report, the USDA left U.S. corn and soybean production outlooks unchanged, while revising wheat higher. The lack of revisions minimized the WASDE's impact on prices.

INSIGHT

Heat Wave: High temperatures along with below-average rainfall is expected to hit the Central U.S. in late June, AgResource said in a note. According to the firm, temperatures are expected to rise as high as nearly 100 degrees Fahrenheit in some locations, which would cause rapid declines in soil moisture built up this spring. "Extreme Central U.S. heat is a worrisome weather trend into July," the firm said.

Bigger Fish: The WASDE report changed little in the way of forecasts about crops, making the USDA's planted acreage report, released once a year on June 30, the next important event for the ag market. "Looks like [the USDA] are marking time until the June acreage report and seeing just how much the weather changes over the next 30 days," AgriSompo's Sterling Smith said. "Heat is coming and if the rains don't persist things could get a little more interesting." The acreage report provides an update on how much farmers planted in the preceding spring, and how much of those acres they may harvest.

Flash Sale Surge: China is back to purchasing U.S. soybeans, with the USDA confirming the third flash sale in less than a week there. Today's flash sale was for 106,000 metric tons of soybeans for delivery in the 2023/24 marketing year. Since Friday, the USDA has confirmed that 314,000 tons of soybeans were sold to China. The surge in interest comes amid a tax change in Brazil that has farmers there reluctant to sell grains. It also comes as soybean futures have been sliding since late May. The wave of Chinese interest may boost futures, but big crops in the U.S. and South America may stifle momentum, says Doug Bergman of RCM Alternatives in a note.

AHEAD

--The USDA will release its weekly export sales report at 8:30 a.m. ET Thursday.

--The USDA will release its weekly grains export inspections report at 11 a.m. ET Monday.

--The USDA will release its weekly Crop Progress report at 4 p.m. ET Monday.

Mary DeWet contributed to this article.

Write to Kirk Maltais at kirk.maltais@wsj.com

(END) Dow Jones Newswires

June 12, 2024 15:59 ET (19:59 GMT)

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