Posted on November, 17, 2021 at 09:25 am
--Wheat for December delivery fell 1.9% to $8.10 1/4 a bushel on the Chicago Board of Trade Tuesday, retreating from recent highs as traders parse demand signals for U.S. exports.
--Corn for December delivery fell 1% to $5.71 a bushel.
--Soybeans for January delivery fell 0.5% to $12.57 1/4 a bushel.
HIGHLIGHTS
Backing Off: CBOT wheat futures retreated from recent highs, although they stayed above the $8-per-bushel mark. "The Minneapolis wheat market successfully found a price level that would ration demand," said Arlan Suderman of StoneX. "Now prices are falling to find that level that re-establishes demand." Monday's close at just over $8.26 per bushel is the highest close for wheat futures since December 2012, driven by inflation as well as supply concerns in wheat-growing areas like Russia and Canada.
Currency Competition: Strength in the U.S. dollar was a pressure point for grain futures, particularly wheat, said AgResource. This, in addition to other weaker currencies, is making traders speculate that the export market may opt to purchase more wheat from sources besides the U.S. "Other ag exporting currencies are weaker, with the euro falling to new lows for this move and Argentina's official peso falling to a record low following federal elections there over the weekend," said the firm. "Key through the balance of the week is whether major wheat importers - including Egypt - opt to reward this break with new purchases."
Missed Opportunity: Another factor weighing on grain futures Tuesday was the virtual meeting between President Biden and Chinese President Xi Jinping, which focused on human rights, climate change issues and Taiwan - as opposed to trade or supply chain problems. "So far, the White House has downplayed developments on trade relations and other issues," said Terry Reilly of Futures International.
INSIGHTS
Rising Tide: Inventories of U.S. ethanol are expected to climb this week, according to analysts surveyed by The Wall Street Journal. They forecast stocks of ethanol may rise to as high as 20.5 million barrels for the week ended November 12, up from 20.29 million barrels last week. Meanwhile, daily production of ethanol may extend its decline, falling as low as 1 million barrels per day according to analysts. If production falls that low, it'll be the lowest in over a month - and down from the nearly-record high of 1.11 million barrels per day seen two weeks ago. Ethanol margins are seen as strong for producers, but crude oil prices have pulled back from multi-year highs seen last week.
Soaring Soil: The value of farmland in the U.S. Corn Belt has soared year-over-year, according to the Federal Reserve Bank of Chicago. In its latest update, the Fed says that the value of farmland in Iowa surged 28% from October 2020 to October 2021. Areas of Illinois increased 13% in the same timeframe, areas of Indiana jumped 15%, and areas of Wisconsin jumped 10%. The Fed attributed the surge in values to "low interest rates, government support and higher-than-normal farm incomes."
Source: Market Screener