By Kirk Maltais
--Wheat for March delivery fell 0.8%, to $7.86 a bushel, on the Chicago Board of Trade on Monday as grain traders were skittish about pushing prices above recent ranges after a disappointing CPI report.
--Corn for March delivery fell 0.4% to $6.82 1/4 a bushel.
--Soybeans for March delivery fell 0.3% to $15.37 1/2 a bushel.
HIGHLIGHTS
Running into a Wall: After spending much of the year so far staying range bound at relatively high levels, grains tumbled on Tuesday. The reason is largely technical, Dan Hueber of the Hueber Report told The Wall Street Journal. "All these markets have pushed against key levels of resistance so [they] need some inspiration, but that may be hard to find," said Mr. Hueber. Grain futures in general have recently been supported by outlooks showing tight supplies globally, but indications of global economies still struggling with inflation could affect the outlook for grains demand.
Stubborn Economics: Tuesday's U.S. CPI figures showed that the cooling of inflation has slowed down, with U.S. CPI up 6.4% in January versus a year earlier. January's U.S. CPI was lower versus the 6.5% reported in December but it was higher than expected by economists surveyed by The Wall Street Journal. Economists had expected January's U.S. CPI to come in at 6.2%. Traders across commodities have been closely watching for how soon the Federal Reserve can control inflation, and for how long commodity demand may suffer during a recession. As a result, Thursday's U.S. CPI reading spurred selling in grains.
INSIGHT
Foot on the Gas: Expectations that Russia is ramping up its attacks on Ukraine, around its one-year anniversary of its military operations in the neighboring country, is injecting uncertainty into geopolitics. The Wall Street Journal reports that Russia has tightened its control of Ukrainian towns like Bakhmut and is attempting to expand outward. For grains, more warzone volatility means more potential issues for exports leaving the Black Sea.
Weather Worries: Rainfall in South America continues to be a factor applying pressure to futures, particularly soybeans, even if traders are generally turning their focus to other matters. Brazil's southern soybean-growing areas and Argentina's northern areas are receiving rain later this week, said Charlie Sernatinger of Marex in a note. The rainfall may become a primary mover for grain futures.
High Mark: Wheat exports set to leave Russia are at their highest level in at least two years, according to Russian trade data processed by SovEcon. The research firm says that outstanding wheat export sales totaled 2.9 million metric tons last week, which is the largest total since Russia began using its current reporting system in 2021. "The increase in sales is driven by strong demand for Russian wheat amid record-high harvest," said SovEcon in a note. The strength of Russian exports has been a factor pressuring world wheat prices downward.
AHEAD
--Kraft Heinz Co. will release fourth-quarter earnings at 7 a.m. ET Wednesday.
--Nutrien Ltd. will release fourth-quarter earnings at 7 a.m. ET Wednesday.
--The U.S. Energy Information Administration will release its weekly ethanol production and stocks report at 10:30 a.m. ET Wednesday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
02-14-23 1528ET
