Wheat Futures Climb to Highest in Four Months — Daily Grain Highlights

By Kirk Maltais

--Wheat for December delivery rose 2.4% to $6.13 1/4 a bushel on the Chicago Board of Trade on Wednesday, rising above the $6-a-bushel threshold for the first time since June as Russia's wheat crop suffers from lacking rainfall.

--Corn for December delivery rose 0.6% to $4.31 1/2 a bushel.

--Soybeans for November delivery fell 0.2% to $10.55 1/4 a bushel.

HIGHLIGHTS

State of Emergency: CBOT wheat led the agricultural complex higher Wednesday, in response to mounting declarations of states of emergency by Russian crop-growing regions. The latest is one declared in Oryol, a region said to be Russia's 10th largest growing region. Other regions, such as Voronezh, have also declared states of emergency, all due to dire drought conditions. Australian wheat is also grappling with drought issues, which supported futures throughout the day.

In Lockstep: Worsening war in the Middle East propelled energy futures today - which in turn gave corn a boost. Ethanol is blended with gasoline in the U.S., meaning that corn -the primary ingredient in ethanol-are exposed to what moves oil. War worries offset the projections of private firms this week raising their outlook for corn yields ahead of next week's USDA WASDE report. "Despite the expected drop in the U.S. carryout indicated by Monday's stocks report, there is going to be an abundant supply of U.S. corn going into the winter," said Tomm Pfitzenmaier of Summit Commodity Brokerage in a note. "The question is whether the demand for corn will hold up… with ethanol production margins shrinking as corn prices rise."

Wetter Forecast: Soybean traders are focused on rainfall in Brazilian growing areas, as dryness makes it difficult for Brazilian farmers to plant soybean crops. Isolated showers are expected across the country this week, with temperatures turning slightly cooler as the week progresses, according to a forecast by DTN - easing concerns about heat damaging nascent crops there. "The forecasts Brazil may be about to turn wetter, and that could spell some real trouble for this rally," said Sterling Smith of AgriSompo.

INSIGHT

Buying in Bulk: Egypt's state grains-purchasing authority is reported to have purchased 3.1 million metric tons of wheat off of the export market, with the seller believed to be Russia. A Reuters article reports Wednesday that the deal will be shipped with 510,000 metric tons of wheat shipped from Black Sea origins to Egypt every month, totaling over 3 million tons by the end of the deal. Egypt heavily subsidizes bread for its people, making the country a big consumer of wheat and a mover of futures prices.

Within Expectations: Daily average production rose in the past week, while inventories fell - both within analyst forecasts, according to the EIA. The agency said that daily ethanol production averaged 1.015 million barrels a day for the week ended Sept. 27. - up from 994,000 barrels a day reported last week and within a forecasted range between 980,000 barrels a day to 1.024 million barrels a day. Ethanol inventories fell from the prior week, dropping to 23.46 million barrels, which is near the midpoint of analyst estimates.

AHEAD

--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.

--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.

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

(END) Dow Jones Newswires

October 02, 2024 15:39 ET (19:39 GMT)

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