By Kirk Maltais
-- Corn for March delivery rose 2.3%, to $6.71 a bushel, on the Chicago Board of Trade on Thursday in response to a surprise cut in corn production seen in Thursday's WASDE report from the USDA.
-- Soybeans for March delivery rose 1.7% to $15.18 1/2 a bushel.
-- Wheat for March delivery rose 0.4% to $7.42 3/4 a bushel.
HIGHLIGHTS
Making Cuts: The USDA attributed its surprise production cuts for corn and soybeans to a reduction in harvested area, which gave those futures contracts a boost.
"Global ending stocks don't project that we need to trade a lot higher as we're not running out of anything, but we still have a lot of production risk," said Doug Bergman of RCM Alternatives in a note.
Less in the Tank: Wheat futures erased morning losses when the USDA released its WASDE report and its quarterly stocks report this afternoon. Wheat stocks as of Dec. 1 came in less than forecast by analysts, totaling 1.28 billion bushels. That is off 7% from this time last year, according to the USDA.
"The stocks in all positions were uniformly bullish," said Charlie Sernatinger of Marex in a note following the report's release.
Slight Adjustment: Morning support for corn and soybean futures came from cuts made to the Brazilian production outlook by Brazilian crop agency Conab.
In its latest report, Conab said that Brazil will produce 152.7 million metric tons of soybeans in the 2022-23 season, along with 125.1 million tons of corn.
Both of these figures are down by nearly a million tons from previous projections, thanks to late starts to planting in some regions, Conab said.
However, the latest outlook remains well higher than the output of the previous marketing year.
INSIGHT
Limited Time Only: The USDA reports released this afternoon contained a few surprises, but grain traders are generally expecting the market to resume its focus on South American weather patterns by next week, if not sooner.
"I don't think this WASDE changes anything longer term," Albert Chu of Newton Investment Management told the WSJ.
Mr. Chu added that with it being early in the year, the trader outlook for global supply and demand is expected to morph considerably as spring draws closer and the next planting season begins.
Swinging Toward Neutral: The likelihood of this long-lasting La Niña finally coming to an end is growing stronger, said the NOAA's Climate Prediction Center in its latest release.
"A transition from La Niña to ENSO-neutral is anticipated during the February-April 2023 season," said the Climate Prediction Center. "By Northern Hemisphere spring, the chance for ENSO-neutral is 82%."
Should this happen, it may mean better crop-growing weather throughout the U.S. and elsewhere starting this year. Drought has been a prevalent problem in many U.S. farm areas in recent years.
On Second Thought ... : Weekly export sales of U.S. grains reported by the USDA fell mostly below trader expectations, due to large cancellations of previously announced sales confirmed this week.
For the week ended Jan. 5, export sales of wheat totaled 92,303 metric tons across the 2022-23 and 2023-24 marketing years, while corn sales totaled 278,087 tons across those years.
Both figures are well below the low side of expectations from traders surveyed by The Wall Street Journal this week.
For both, large cancellations from select areas were the culprit for the missed targets.
Soybean sales totaled 783,415 tons across both marketing years, which fell on the low side of trader projections and also encompassed 348,800 tons of canceled sales.
AHEAD
-- The CFTC is scheduled to release its weekly Commitments of Traders Report at 3:30 p.m. EST Friday.
-- The USDA and the CBOT will be closed in observance of Martin Luther King Jr. Day on Monday, reopening Tuesday.
-- The USDA is due to release its weekly grains export inspections report at 11 a.m. EST Tuesday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
01-12-23 1551ET
