By Kirk Maltais


--Wheat for July delivery rose 1.1%, to $6.95 3/4 a bushel, on the Chicago Board of Trade on Tuesday, in response to questions about the amount of rainfall predicted for U.S. crops as well as uncertainty around Russia's diplomatic decisions.

--Soybeans for November delivery rose 0.1%, to $13.42 3/4.

--Corn for December delivery was unchanged, at $5.97 1/4 a bushel.


HIGHLIGHTS


Variable Precipitation: CBOT grain futures swung back and forth today before landing in middle ground. The chief factor moving grain futures is uncertainty over what effect the forecast will have on nascent U.S. grain crops, with rainfall lacking in the past week and dryness expected to linger in the coming weeks. However, Joel Karlin of Ocean State Research said more rain than expected is easily a possibility for U.S. grains. "Maps are suggesting maybe a pattern change that would bring a more active weather pattern to the central and eastern Corn Belts, but they have been doing that for a while and trade now wants to see real raindrops instead of just a forecast," he said.

Russian Roulette: Questions about Russia drove wheat prices higher for much of the day. According to Jack Scoville of Price Futures Group, Russia's $240 a ton floor price for wheat exports, along with continued threats of pulling out of the Black Sea grain export deal, were the main reasons wheat maintained its gains. The price floor for Russian wheat curbs the undercutting of other export prices, with Russia attempting to ensure a certain amount of revenue from its wheat crop.


INSIGHT


Fickle Weather: Arid weather is the principal threat to corn supplies around the world, with the onset of El Nino threatening to deprive crops growing in places like the U.S. Midwest with needed precipitation early in their growth cycle. However, without El Nino doing damage to corn crops, world production is expected to rise 6% from last year, said Mintec in a note, citing USDA data. "I think corn prices would struggle to rally from the current levels unless there is a threat to the US corn crop," said one unnamed trader quoted in the note. "Apart from that, everything is looking quite bearish."

Squeezing Ethanol Inventories: Dry weather is expected to have an adverse effect on the U.S. ethanol industry, forcing prices per barrel of ethanol to rise as ingredients and operations both cost more. If the U.S. corn crop is hammered by drought conditions--which data from the USDA and the U.S. Drought Monitor suggests is increasingly becoming a problem--then an already-elevated spot basis for corn sold to ethanol plants by farmers only looks to increase. "The weather could cut into ethanol plants profit margin," said Daniel Flynn of Price Futures Group. "I do expect future shortages with yields being compromised by little or no rain."


AHEAD


--The EIA will release its weekly ethanol production and stocks report at 10:30 a.m. ET Thursday.

--The USDA will release its monthly Livestock Slaughter report at 3 p.m. ET Thursday.

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

--The USDA will release its monthly Cattle on Feed report at 3 p.m. ET Friday.

--The USDA will release its monthly Cold Storage report at 3 p.m. ET Friday.


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


(END) Dow Jones Newswires

06-20-23 1543ET