By Kirk Maltais
--Wheat for July delivery on Tuesday fell 1.5%, to $6.09 1/4 a bushel, on the Chicago Board of Trade. Nerves about the Federal Reserve's decision on interest rates this week have caused markets across the board to sink.
--Soybeans for July delivery fell 1.2% to $14.10 3/4 a bushel.
--Corn for July delivery fell 0.8% to $5.80 a bushel.
HIGHLIGHTS
Waiting for the Fed: Markets were cautious today, anxiously awaiting the Federal Reserve's latest decision on interest rates. The Dow Jones Industrial Average is down over 400 points as Fed Day looms and grains traders are braced for any surprises. Should the Fed offer guidance expecting rising rates to linger longer, then markets are likely to sell, including grains. However, previous days of losses are expected to keep selling pressure tentative, said Karl Setzer of Mid-Co Commodities.
No Surprises: The USDA's latest Crop Progress report was a factor pressuring trading throughout the day, particularly in the morning. The winter wheat crop has gotten some benefits from the rainfall that has passed through drought-stricken states like Kansas and Oklahoma, albeit only a small boost. Winter wheat is in good or excellent condition totaling 28%, up from 26% last week. The USDA also reported that 26% of expected corn has been planted, on par with the four-year average, and 19% of soybeans have been planted - well beyond the four-year average of 11%.
INSIGHT
Bargaining Table: Negotiations to again extend the Black Sea Grain Initiative, which is a deal allowing Ukraine to export grains via its ports, are expected to pick up this week. The deal has been a source of volatility for prices, particularly wheat, with Russia arguing during the past two times the deal has been extended that it hadn't received enough to make its participation worthwhile. Russia again is threatening its exit, but traders are unconvinced. "The market is oversold, but that hasn't mattered," said Doug Bergman of RCM Alternatives in a note.
Field Day: A lot of attention has been given to Russia's sizable wheat crop, and with good reason. Stocks of wheat in Russia are up 79% from the five-year average, says consultancy SovEcon. However, wheat grown in Australia is also expected to crowd the global export market. Dry conditions are expected to descend on farmland and limit wheat production in Russia, but the country is still expected to produce an above-average sized crop, said the USDA in an analysis released by its Foreign Agriculture Service last week. The above-average production is expected to keep export prices cheap.
Potential Reopening: Flooding on the upper portion of the Mississippi River continues this week, but some areas of the river are expected to reopen by midweek, said American Commercial Barge Line in a note. The ACBL says that it expects most of the locks to reopen this week, with one lock's reopening expected in two weeks. Meanwhile, a previously-planned closure of lanes on the Illinois River comes into force in June, continuing through September. River difficulties are a factor that limited demand for U.S. exports last year and may impact shipments now. However, U.S. farmers are in the midst of planting their new crop for this year.
AHEAD
--Ingredion Inc. will report its first quarter earnings before the stock market opens Wednesday.
--The EIA will release its weekly ethanol production and stocks report at 10:30 a.m. ET Wednesday.
--Corteva Inc. will release its third-quarter earnings report at 5 p.m. ET Wednesday.
--Kellogg Co. will release its first-quarter earnings report at 5 p.m. ET Wednesday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
05-02-23 1504ET
