By Kirk Maltais
-- Wheat for December delivery fell 1.8% to $5.80 1/2 a bushel on the Chicago Board of Trade on Thursday, weighed down by USDA's increased outlook for Russian production in the WASDE report.
-- Corn for December delivery fell 1.6% to $4.68 3/4 a bushel.
-- Soybeans for January delivery fell 1.5% to $13.45 a bushel.
HIGHLIGHTS
More Russian Wheat: USDA's Russian wheat production forecast was marked 5 million metric tons higher in this month's WASDE report, putting the total projection at 90 million tons. An uptick in Russian production is particularly consequential for wheat futures, as Russia is the leading exporter of wheat and has an outsized effect on world export prices.
"For wheat, we expect Black Sea competition to continue to undermine prices," said Terry Reilly of Marex in a note.
Changing Situation: A higher revision in yields for corn and soybeans in the WASDE report led to larger-than-expected upward revisions of crop production, which in turn pressured futures.
"Neutral to negative report overall, with higher-than-expected yields," said Naomi Blohm of Total Farm Marketing in a note following the report's release.
One big surprise was a 1.9 bushel-per-acre increase for U.S. corn yield, well up from the average outlook of 173.2 bushels per acre forecast by analysts surveyed by The Wall Street Journal.
Show of Force: Ukraine's report that a Russian missile hit a civilian vessel in the Odesa region was a source of support for grains Wednesday, but the effect waned into Thursday.
"Overnight prices have given part of the rally back," said Steve Freed of ADM Investor Services in a note.
Pre-WASDE jitters also kept futures steady until the report's release.
INSIGHT
Quick Pivot: Thursday's production data from USDA weighed on CBOT grains, but the reaction of traders to higher-than-expected output data will likely be limited, said Arlan Suderman of StoneX in a note.
"Soybean traders are monitoring Center-West Brazil weather once they get beyond their initial reaction to today's USDA crop report numbers," Suderman said. A shortfall in Brazilian production would be more consequential to the world balance sheet than U.S. shortfalls, which is why reaction to the WASDE is limited, he added.
Bevy of Shipments: Following the release of its weekly export sales report Thursday morning, USDA confirmed large flash sales of U.S. soybeans with 1.04 million metric tons sold to China for delivery in the 2023-24 marketing year, and another 662,500 tons sold for delivery to unknown destinations.
Grain traders and analysts generally consider "unknown destinations" to typically signal China, meaning the market speculates the country purchased roughly 1.7 million tons of soybeans. The flash sales announcement came ahead of the WASDE report.
Thinning Herd: Covered railcars -- the kind used to haul grain -- are becoming increasingly expensive to rent, USDA says in its latest weekly Grain Transportation Report. Quoting analysis from trade publication Railway Age, grain-hauling railcars now cost over $600 per month to lease for five- to seven-year terms, which is higher than in early 2020, when rates were around $400 per month.
"That change could be due to there being fewer cars today, as well as higher interest rates and poorer rail service," USDA said.
Grain carloads in service are down 5% from this time last year, according to USDA.
AHEAD
-- USDA will be closed in observance of Veterans Day on Friday. It will reopen on Monday.
-- USDA is scheduled to release its weekly grains export inspections report at 11 a.m. EST Monday.
-- The CFTC is due to release its Commitments of Traders Report, delayed by the holiday, at 3:30 p.m. EST Monday.
-- The USDA is scheduled to release its weekly crop progress report at 4 p.m. EST Monday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
11-09-23 1539ET
