By Kirk Maltais


-Wheat for March delivery fell 1.8% to $5.91 a bushel, on the Chicago Board of Trade on Thursday, with the USDA's WASDE report showing less domestic demand and increasing foreign production.

-Corn for March delivery fell 0.2% to $4.33 1/4 a bushel.

-Soybeans for March delivery rose 0.6% to $11.95 1/2 a bushel.


HIGHLIGHTS


Cause and Effect: CBOT wheat led the way lower for grains today. A cut in domestic demand along with higher export estimates for Argentina, Australia, and Ukraine was the driver for tumbling futures. The improved expectations for Argentina and Australia likely reflects healthier crop estimates there. "The Ukraine increase is likely a nod to the recent successful operation of the grain corridor," Rabobank said in a note.

Balancing Act: The USDA's WASDE report showed projections of higher stocks and lower exports for U.S. grains, while making modest cuts to Brazilian corn and soybean output and no change at all to Argentina's expected production. Traders spent the rest of the day evaluating the accuracy of the USDA's Brazilian projections versus that of Brazilian crop agency Conab, which forecast deeper cuts to production. "I think it's kind of a jump ball," said Don Roose of U.S. Commodities. As a result, corn and soybean futures oscillated between higher and lower on the day.


INSIGHT


Built In: News that would normally cause grain futures to sink -- lower export forecasts, higher ending stocks -- was possibly already represented in low CBOT prices, Michael Zuzolo of Global Commodity Analytics said in a note. "The trade is 'baking-into' the prices a declining demand for U.S. grain and soy exports, mainly on the heels of China's continued deflationary pressures," Zuzolo said. Brazil getting a larger share of the world export market has been an ongoing concern for traders and has pressured futures since the start of the year.

Looking for Direction: CBOT soybeans and corn struggled to find a direction after the WASDE report was issued. Some traders had hoped that a surprise out of today's report would spur a wave of short-covering, but nothing forecast by the USDA has provided a catalyst for change. "This bear market across feed oilseeds may feel overstretched," said Rabobank in a note in reference to soybeans. "With additional reserves being built, and U.S. farmers readying higher acres, it is clear that the market is increasingly oversupplied." Less-than-ideal weather in the U.S. Corn Belt during the planting season is seen as a potential catalyst for a short-covering wave, Rabobank said.

Transition Time: The chances of the current El Niño climate system to transition over to a neutral system this spring are seen as high, according to the NOAA's Climate Prediction Center-- which gives a 79% chance for a neutral system by April-June 2024. From there, the odds of La Niña developing over the summer are on the rise, with a 55% chance of the climate system being in place by the end of August 2024. How the climate is behaving is of interest to grain traders, especially at the onset of planting season in the U.S., which is typically in April.


AHEAD


-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 2022 Census of Agriculture at noon ET Tuesday.


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


(END) Dow Jones Newswires

02-08-24 1529ET