Wheat Futures Rise as Traders Digest Tighter Forecasts — Daily Grain Highlights

Wheat for March delivery experienced a 1.3% increase, reaching $5.93 1/4 per bushel on the Chicago Board of Trade on Friday. Traders are grappling with growing signs of a tightening supply/demand situation. - By Kirk Maltais

Soybeans for March delivery saw a modest uptick of 0.04%, settling at $12.14 per bushel.

Corn for March delivery also experienced a rise of 0.3%, reaching $4.45 1/4 per bushel.

Highlights

Catching Up: Wheat saw a delayed positive reaction from last week's WASDE and Grains Stocks report from the USDA, contributing to Friday's increase. These reports hinted at a potentially tighter supply/demand scenario for global buyers this year. Despite these indications, the CBOT ag complex initially did not reflect this outlook. John Payne of Hedgepoint Global suggested, "Prices did not reflect that way obviously, I think that was just from a mass selling program across all ags/feedgrains." Additionally, concerns about potential winterkill in certain U.S. growing areas boosted wheat this week.

South American Focus: Grain traders redirected their attention to growing conditions in South America on Friday, resuming a more prominent role after playing a lesser role in recent sessions. AgriTel noted, "Operators remain vigilant regarding the South American situation in terms of yields for crops currently being harvested in Brazil, and the state of crops in Argentina following the finalization of sowings." Traders are closely monitoring forecasts in these regions, particularly anticipating heavy rain arriving in many areas over the weekend.

Fresh Exports: The USDA reported a fresh flash sale of 297,000 metric tons of soybeans to China. This announcement followed the agency's weekly export sales report, which showed soybean sales at the higher end of analyst forecasts. These fresh sales are occurring as analysts and traders contemplate what is needed to stimulate short-covering for oversold grain futures. Doug Bergman of RCM Alternatives noted, "The market is in the process of correcting from oversold with room to trade higher as that happens."

Insight

Poking Along: Despite expectations of substantial short-covering this week, it has yet to materialize. For corn, the hindrance appears to be doubts about available supply meeting what's perceived as weak demand. Jack Scoville of Price Futures Group commented, "Ideas of weak demand are keeping prices low. The market feels that there is more than enough corn for any demand." While USDA export sales reported on Friday were stronger than in previous weeks, they failed to generate excitement among traders.

New Shorts: The latest Commitment of Traders report from the CFTC, expected at 3:30 p.m. Eastern time, is anticipated to reveal an increase in short positions in grains through the week ending Jan. 16, according to Joel Karlin of Ocean State Research. "The trade is expecting this afternoon's COT report to show funds added to what already are large short positions in corn and wheat and, having liquidated recent longs in beans and meal, are probably now short those markets also," Karlin stated. Traders and analysts have been anticipating a strong turnaround in prices given the large short positions in grains, but this turnaround has yet to occur.

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