Wheat extends gains on supply concerns; corn, soybeans ease

FUNDAMENTALS

* The Chicago Board of Trade (CBOT) most-active wheat contract edged up 0.1% to $10.59-3/4 a bushel, as of 0019 GMT, corn dipped 0.2% to $7.28-1/2 a bushel and soybeans fell 0.1% to $17.28-1/4 a bushel.

* For the week, wheat is down more than 8%, corn has lost 6% and soybeans have dropped marginally.

* The agricultural markets are cautious about the likelihood of a deal over Ukrainian ports while fighting continues in Ukraine and as Moscow seeks sanctions concessions rejected by Kyiv and its Western allies.

* Prices had eased earlier this week on expectations of resumption in Black Sea supplies.

* U.N. aid chief Martin Griffiths is in Moscow to discuss clearing the way for exports of grain and other food from Ukraine’s Black Sea ports, a U.N. spokesperson said.

* Griffiths will meet Russian officials days after another senior U.N. official, Rebecca Grynspan, had “constructive” talks in Moscow with Russian First Deputy Prime Minister Andrei Belousov on expediting Russian grain and fertilizer exports.

* Chinese consumers are likely to have to pay more for food staples like noodles and bread this year, as record wheat prices in the world’s top consumer of the grain get passed on to food makers, traders and analysts said.

* Argentina’s wheat planting area for the 2022/23 season is expected to be around 6.5 million hectares, down from previous forecast of 6.6 million hectares, the Buenos Aires Grains Exchange said on Thursday.

* The exchange blamed the 100,000 hectare (247,000 acre) reduction on dry conditions in northern Argentina, with no rains seen in short-term forecasts. The exchange said previously that high fertilizer prices and rising input costs are also having negative effects on the new wheat season.

* India has allowed wheat shipments of 469,202 tonnes since banning most exports last month, but at least 1.7 million tonnes is lying at ports and could be damaged by looming monsoon rains, government and industry officials told Reuters.

* Commodity funds were net buyers of CBOT soybeans, soyoil, wheat and soymeal futures contracts on Thursday and net even on corn futures contracts, traders said.

MARKETS NEWS

* Global equity markets rose while U.S. yields were lower on Thursday after lower-than-expected private payrolls data stirred hopes that the American economy was likely cooling and the Federal Reserve might be persuaded to modify its aggressive stance on interest rates and inflation.

DATA/EVENTS (GMT, May) 0750 France S&P Global Serv/Comp PMIs 0755 Germany S&P Global Services PMI 0755 Germany S&P Global Comp Final PMI 0800 EU S&P Global Serv/Comp Fnal PMIs 1230 US Non-Farm Payrolls 1230 US Average Earnings YY 1345 US S&P Global Serv/Comp Fnal PMIs 1400 US ISM N-Mfg PMI (Reporting by Naveen Thukral; Editing by Sherry Jacob-Phillips)

SOYBEANS CLOSE THE DAY STRONG

Soybeans had another strong performance with soybean oil trading sharply higher. Wheat futures also closed higher, while the corn market closed mixed.

July corn closed 1 cent lower today at $7.30. December corn closed up 2 ¾ cents at $6.94. July soybean futures closed up 39 cents at $17.29, while the November contract closed 26 cents higher. Wheat futures closed higher with CBOT wheat closing up 17 cents, KC wheat up 15 cents, and Minneapolis up 5 cents.

The Ethanol Production report, which was released today, was viewed as positive for ethanol and corn prices. Ethanol production increased to 1.071 million barrels per day, up from 1.014 million barrels per day last week. At the same time, ethanol stocks went down to 964 million gallons, which was down 31.5 million barrels from last week. Spot ethanol prices are $2.75 to $2.78 per gallon and demand remains strong. Can you imagine where gasoline prices would be if we did not have ethanol?

Today, the outside markets were viewed as bullish for the grain markets. The U.S. dollar is trading lower. Crude oil is up $1.50 per barrel, and the stock market moved higher with the Dow up 284 points at this hour.

In the livestock markets, June hogs closed up 25 cents at $110.05. June Cattle closed up 82 cents at $133.62, and August Feeders closed up $3.22 at $172.95.

MIDDAY COMMENTS: 12 P.M.

The USDA announced another large soybean sale – this time to Pakistan. The sale was for 352,000 tons with 55,000 old and 297,000 new.

At this hour, July corn has had a 13-cent trading range and is currently down 1 cent. December corn was lower most of the morning but is now 3 cents higher. July soybeans have had a 51-cent trading range and are currently up 39 cents. November soybeans are 26 cents higher. Wheat futures are higher, with CBOT wheat up 18 cents, KC wheat up 30 cents, and Minneapolis wheat 9 cents higher.

I am impressed that the bull spreads keep working in soybeans and even with these high prices we do not – yet – see any demand destruction. For wheat, the early week meltdown in the wheat futures market has U.S. futures price trading at a discount to the world price – not bullish wheat at this time of year. I would not sell anything after the recent hard sell-off. U.S. wheat futures appear to be too low.

The trade will watch closely for any changes in the weather forecasts over the weekend and what the USDA indicates in the weekly Crop Progress report next Monday. I think the initial crop ratings for corn will come in quite high. The crop is 7 to 10 days behind normal but looks good in most areas.

In the outside markets crude oil is now up $2.00 per barrel. The U.S. stock market has reversed course and is making new highs on the day with the Dow up 184 points.  

OPENING COMMENTS: 8:15 A.M.

The grain markets are all up this morning, after getting slammed lower yesterday. Funds continue to sell.

At this time, July corn is up 6 cents. December corn is up 5 cents. July soybeans are up 11 cents. November soybeans are up 8 cents. Winter wheat futures are up 16 to 20 cents, while Minneapolis wheat is 15 cents higher.

The week-to-date change shows corn down 39 cents. Soybean futures are down 30 cents, and wheat futures are down $1.00 per bushel on the CBOT. Minneapolis wheat is down 87 cents; while KC wheat is down 85 cents.

I am surprised at how hard the wheat market dropped because of Putin's comments about opening the Black Sea to Ukrainian grain exports. Why does he want to do this? In my heart, I hope it works; in my head, I know it is a long shot. This remains a very choppy market – do not sell on hard breaks and do not buy rallies.