Corn Futures Drop as Harvest Outlook Outweighs Geopolitics … – Marketscreener.com

By Kirk Maltais

— Corn for December delivery fell 0.8% to $4.88 1/4 a bushel on the Chicago Board of Trade on Monday, with pressure from the progressing harvest taking trader attention away from the outbreak of war in Israel.

— Soybeans for November delivery fell 0.2% to $12.63 3/4 a bushel.

— Wheat for December delivery rose 0.7% to $5.72 a bushel.

HIGHLIGHTS

Home Grown: The conflict in Israel dominated headlines and was initially a spark for grain futures, but support soon receded. Pressure came from the flow of grains stemming from the harvest in the U.S., with the corn crop expected to be 35% complete and soybeans 40% complete, said Terry Reilly of Marex in a note.

Such progress is in line with the typical pace at this time of year, according to historical data from the USDA.

Back Tracking: Wheat futures were lifted Monday, and the conflict between Israel and Hamas joined the Russia-Ukraine war as geopolitical factors supporting futures amid an expected strain on exporting channels.

However, traders may not be pricing in risk premium as much as they are trading technically, said Arlan Suderman of StoneX in a note. “Wheat continues to put risk premium back into prices as geopolitical risks elevate, but this is largely short covering by speculative funds at this point.”

On Friday, the CFTC’s Commitments of Traders Report showed managed money traders adding short positions for both hard and soft red wheat for the week ended Oct. 3, with the two combined adding roughly 9,300 short contracts.

INSIGHT

War Torn: The effect war in Israel is having on energy prices looks to be a factor for grains going forward.

“The grains — wheat in particular — are riding the coattails of crude oil and the commodities in general to open the week after Palestinian militants attacked Israel on a major holiday Saturday,” said Matt Zeller of StoneX in a note. “The direct effect on the grains or even crude oil is minimal at this point, but ‘geopolitical tensions’ reign to open the week regardless.”

Cutting Room: Thursday’s WASDE report is expected to show the USDA revising its production outlooks to the downside, albeit slightly.

U.S. corn production is expected to drop 34 million bushels to 15.1 billion bushels, while soybean production is expected to decline 14 million bushels to 4.13 billion bushels, according to analysts surveyed by The Wall Street Journal.

Analysts expect the report to point toward a solid finish for U.S. crops.

“There has been a lot of variability, but not widespread crop failures that some were fearing with the hot/dry finish to the growing season,” said Doug Bergman of RCM Alternatives in a note.

AHEAD

— The USDA is scheduled to release its weekly grains export inspections report at 11 a.m. EDT Tuesday.

— The USDA is due to release its weekly crop progress report at 4 p.m. EDT Tuesday.

— The EIA is scheduled to release its weekly ethanol production and stocks report at 10:30 a.m. EDT Thursday.

— The USDA is due to release its monthly world supply and demand forecast at noon EDT Thursday.

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

(END) Dow Jones Newswires

10-09-23 1600ET