By Kirk Maltais


--Corn for March delivery fell 2% to $4.48 1/2 a bushel, on the Chicago Board of Trade on Friday, tumbling after the USDA forecast higher-than-expected production and inventories for 2023/24 crop.

--Wheat for March delivery fell 1.1% to $5.96 1/2 a bushel.

--Soybeans for March delivery fell 0.8% to $12.25 3/4 a bushel.


HIGHLIGHTS


Lesser Stress: U.S. grain outlooks for the 2023/24 marketing year showed a "comfortable" supply-and-demand situation, Doug Bergman of RCM Alternatives said in a note following the release of the USDA's WASDE report. The fresh estimates pared concerns about crop stress over the past year. The more-relaxed supply situation means that next season's crop has more room to handle weather issues, Bergman said. "Weather will still need to cooperate this growing season, but going into the marketing year, supplies are forecast at comfortable levels across the board," he said. The USDA said it sees U.S. corn supplies rising more than use, prompting the agency to raise its ending-stocks forecast by 31 million bushels.

Not Quite Enough: The WASDE showed mostly larger production and stock figures for U.S. grains, but a separate report from the agency said acres of winter wheat seeded were expected to total 34.4 million acres, a 6% drop from the previous year. Even so, analysts said the results weren't enough to buoy futures. "The wheat got a bullish planted acreage number, but the market is looking at the bigger Black Sea production numbers, and the increase in world stocks," said Charlie Sernatinger of Marex in a note.


INSIGHT


Hot Zone: Attacks launched by the U.S. and the U.K. against Houthi rebels in Yemen are likely to fan the conflict in the Red Sea, creating risk for supply chains running out of the area. Heading into a three-day weekend, fund traders who were largely short in grains attempted to prevent exposure to the Red Sea risks while the market is closed. The WASDE release reversed that momentum, but further Middle East military action may add a greater risk premium to grains. "The rebel Houthis vowed additional terror and an increase in Red Sea ship attacks… and indicated that all U.S./UK interests are now legitimate targets," AgResource said in a note.

Low Balling: Traders and analysts are wondering how low grains future prices can go. For corn, current levels of may sink 15 to 30 cents a bushel more, John Payne of Hedgepoint Global said. "I think the new crop September and December contracts are closer to a low than you would think, just based on the idea the price pencils pretty well for the feeder guys -- and if ethanol stays profitable they are buying too." Soybeans could drop to roughly $11.50 a bushel, Payne said.


AHEAD


--The USDA and the CBOT will be closed in observance of Martin Luther King Jr. Day on Monday, reopening on Tuesday.

--The USDA will release its weekly grains export inspections report at 11 a.m. ET Tuesday.

--The EIA will release its weekly ethanol production and stocks report at 11 a.m. ET Thursday.


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

(END) Dow Jones Newswires

01-12-24 1512ET