By Kirk Maltais
--Wheat for July delivery fell 1.8%, to $6.16 3/4 a bushel, on the Chicago Board of Trade on Wednesday, with traders opting to focus on Friday's WASDE report and the U.S. weather outlook instead of the dam collapse in Ukraine.
--Corn for July delivery fell 0.6% to $6.04 1/4 a bushel.
--Soybeans for July delivery rose 0.6% to $13.60 3/4 a bushel.
HIGHLIGHTS
Fading Influence: The violence seen in the Russia-Ukraine war, including the collapse of a major dam in southern Ukraine damaging acres of farmland, seemed to no longer support wheat futures in today's session. The weakness follows yesterday's higher finish, signaling that traders are more concerned about expectations of Friday's WASDE report possibly showing higher forecasts for U.S. wheat production. Analysts surveyed by The Wall Street Journal expect the report to show a slight uptick in production, to 1.67 billion bushels in the 2023/24 marketing year.
Staying Power: Traders continued to focus mainly on how weather in the U.S. may affect freshly planted crops. June weather in the Corn Belt has been dry so far, and how it fares through the rest of the month will have a strong effect on price movement. "The dry U.S. weather is attracting market attention and that will only intensify if the hot dry conditions persist into the last half of June," said Tomm Pfitzenmaier of Summit Commodity Brokerage in a note.
Hungry for Soy: China's demand for soybean exports was more than expected in May, which propelled CBOT soybean futures higher throughout the day. A record 12 million metric tons of soybeans were imported into China in May, which is up 24% from this time last year. U.S. supply has been a key source for these soybeans, along with South America. While South American soybeans are expected to be the main source of China's supply going forward, traders are taking this data as a positive sign for U.S. demand, said AgResource in a note.
INSIGHT
Paring Expectations: While wheat production is seen rising, traders expect Friday's WASDE report to show slightly lower production estimates for corn and soybeans, according to analysts surveyed by The Wall Street Journal. They're forecasting the USDA to pare their estimate for 2023/24 corn production back 55 million bushels to 15.21 billion bushels, and soybean production back 5 million bushels to 4.505 billion bushels.
Costly Premiums: U.S. farms are getting throttled by higher property insurance premiums tied to increasingly strong weather disasters, said agricultural lender CoBank in a note. CoBank said U.S. grain elevators and farms paid 40% to 60% more when renewing this year, and that rates for customers afflicted with property losses in the past 3 years have doubled. "Cooperatives and their property-casualty insurers have faced a perfect storm of excessive property losses due to floods, tornados and a host of severe weather events," said Kenneth Scott Zuckerberg, an economist for CoBank. Zuckerberg cites inflation as a driver for higher costs for labor and building repairs. The firm forecasts elevated insurance costs for the next year to 18 months.
Production Surge: Daily production of U.S. ethanol shot up to its highest average since December 2022, according to EIA data. The agency said daily production for the week ended June 2 averaged 1.036 million barrels a day. That's up 32,000 barrels a day from last week, and above the high-end of estimates. Analysts surveyed by Dow Jones this week had forecast daily production to land anywhere from 983,000 barrels a day to 1.026 million barrels a day.
AHEAD
--The USDA will release its weekly export sales report at 8:30 a.m. ET Thursday.
--The USDA will release its monthly world supply and demand report at noon ET Friday.
--The CFTC will release its weekly Commitment of Traders report at 3:30 p.m. ET Friday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
06-07-23 1608ET
