By Kirk Maltais
--Wheat for July delivery fell 2% to $6.28 1/2 a bushel on the Chicago Board of Trade Tuesday, in response to weather outlooks turning wetter in some drought-laden areas that primarily grow winter wheat.
--Corn for July delivery rose 1.2% to $4.79 3/4 a bushel.
--Soybeans for July delivery fell 1% to $12.10 1/4 a bushel.
HIGHLIGHTS
Easing the Stress: Some drought-stricken areas of the U.S. Plains are expected to get above-average rainfall over the next two weeks, according to the NOAA's Climate Prediction Center. Both the 6-10 day and 8-14 day outlooks show above-normal precipitation in the Texas panhandle, with Oklahoma and Kansas getting more of that rain in the 8-14 day forecast. This is pressuring CBOT wheat futures because of the amount of winter wheat that's grown in those areas. Better precipitation is also expected to arrive in the southern and delta regions.
Posting Gains: Many traders locked in profits Tuesday, due to potential risk for surprises ahead that could upend those gains. "We've seen producers being active, playing defense against prices at these levels ahead of next week's WASDE report and scheduled meeting between Trump and Xi," said Oliver Sloup of Blue Line Futures. That meeting has already been rescheduled, and traders are positioning themselves in the event of a surprise announcement from President Trump. Next week's WASDE could potentially carry surprises regarding planting acres or grain supply as well.
On Par or Better: The planting pace in the U.S. is robust, even with drought in the western plains and excessive rainfall in the east. The USDA reports that 38% of the U.S. corn crop has been planted as of May 3, the same amount planted at this point last year and four points ahead of the five-year average. Additionally, 33% of the U.S. soybean crop has been planted, which is five points ahead of this time last year--and 10 points in front of the five-year average. The dismal condition of the winter wheat crop has improved slightly, up one point to 31% good-or-excellent condition.
INSIGHT
Inflating Crops: The outlook for Brazil output keeps being revised higher by analysts. In its latest projections, StoneX Brazil says it now sees soybean production in Brazil at 181.6 million metric tons, up from 179.7 million tons previously forecast. The firm attributes the change to "small increases in both plantings and yield," said Matt Zeller of StoneX in a note. Total corn production was also raised, to 137 million tons from 135.7 million tons previously. How large a crop Brazil manages to harvest this year will dictate how tough competition will be for U.S. offerings on the world export market.
Eject Button: Violence escalated in the Strait of Hormuz Tuesday, but the market is weighing out continued supply-chain risks versus a strong start to the U.S. crop. "Grain valuations are far above 'fair value' as measured by U.S. and world stocks-to-use ratios, which grain analysts have used for decades," said AgResource in a note. The war has helped grain futures jump year-to-date, but they're taking a breath this morning.
Looking Higher: Average daily production of ethanol in the U.S. is largely expected to rise in Wednesday's weekly petroleum report from the EIA, which contains U.S. ethanol production and stocks data. Analysts surveyed by Dow Jones forecast daily production to land between 1 million barrels a day and 1.1 million barrels a day. That's versus 1.009 million barrels a day reported last week, with most analysts expecting an uptick in daily production. Weekly ethanol stocks are expected to stay around 25.8 million barrels.
AHEAD
--The EIA will release its Weekly Petroleum Status Update report at 10:30 a.m. ET Wednesday.
--CF Industries Holdings will release its first-quarter earnings report at 4:30 p.m. ET Wednesday.
--The USDA will release its weekly export sales report at 8:30 a.m. ET Thursday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
05-05-26 1513ET
