By Kirk Maltais
-- Wheat for May delivery fell 0.7% to $6.74 a bushel on the Chicago Board of Trade on Tuesday in reaction to USDA forecasting higher domestic inventories in its latest WASDE report.
-- Corn for May delivery fell 0.5% to $6.51 a bushel.
-- Soybeans for May delivery rose 0.7% to $14.97 1/4 a bushel.
HIGHLIGHTS
Adverse Reaction: USDA estimates for U.S. wheat ending inventories totaled 598 million bushels, well up from analyst expectations of 581 million bushels. This higher figure applied pressure to wheat futures.
"Wheat did not like the USDA report today, as domestic stocks climbed significantly more than expected, and most of that was in the spring wheat category," said Charlie Sernatinger of Marex in a note.
The USDA also increased its expectations for Black Sea wheat exports, increasing Russia's export outlook by 1.5 million tons to 45 million tons and Ukraine exports up 1 million tons to 14.5 million tons.
Good Start: Spring planting for crops in the U.S. is under way. The weather forecast for the next week or two looks promising for farmers hoping to do early fieldwork, which put pressure on grain futures.
"Wide open weather this week should allow for fieldwork to get a good start across much of the Midwest," said John Stewart and Associates in a note. "With limited chances for frost in the next couple of weeks, planters will be busy."
In its latest crop progress report, the USDA says that 3% of intended U.S. corn acres have been planted, up from the average of 2% this early in the season.
Production Reduction: Soybeans were supported by the USDA cutting its outlook for soybean production out of Argentina. The USDA said that Argentina's soybean production is expected to total 27 million metric tons in the 2022-23 marketing year, down from 33 million tons forecast last month.
Analysts surveyed by The Wall Street Journal forecast the USDA's estimate for Argentina's soybean production to drop to 29 million metric tons.
INSIGHT
Looking Ahead: Some traders were disappointed with Tuesday's WASDE, but are now looking eagerly toward next month's report in which the USDA is expected to incorporate early data from U.S. fields being planted.
"The USDA chose to pass the buck on this specific report," said Rich Nelson of Allendale Inc. He says the USDA's current estimates are seen as "very realistic," allowing traders to quickly pivot their focus back to early spring planting.
Lingering Drought: While spring planting appears to be getting an optimal start in the U.S., winter wheat is struggling. Drought conditions that have lingered all winter are being felt via an overall poor condition for winter wheat crops.
In its crop progress report, the USDA assessed winter wheat in good or excellent condition at only 27%. That is down from 28% last week, and 32% at this time last year.
The culprit for the low quality ratings is the persistent drought in winter wheat areas. The U.S. Drought Monitor shows areas of Nebraska, Kansas, Oklahoma and Texas suffering from extreme to exceptional drought conditions.
Support Zone: After the WASDE, some traders see corn's current level as well supported.
"With no change in U.S. carryover, and a world stocks number close to estimates, I think that the corn is justified by this price," said Michael Zuzolo of Global Commodity Analytics in a note.
Corn futures have been on the rebound since hitting a six-month low of $6.12 a bushel in early March, but have given back some of those gains in recent trading sessions.
AHEAD
-- The EIA is scheduled to release its weekly ethanol production and stocks report at 10:30 a.m. EDT Wednesday.
-- The USDA is due to release its weekly export sales report at 8:30 a.m. EDT Thursday.
-- The CFTC is scheduled to release its weekly commitments of traders report at 3:30 p.m. EDT Friday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
04-11-23 1540ET
