Wheat Futures Higher on Questions of Russian Crop Health — Daily Grain Highlights

By Kirk Maltais

• Wheat for December delivery rose 1.2% to $5.21 3/4 a bushel on the Chicago Board of Trade on Thursday, with traders questioning if the Russian wheat crop is really growing in size as forecast by some groups.
• Soybeans for November delivery rose 0.9% to $10.34 1/4 a bushel.
• Corn for December delivery rose 0.7% to $4.20 a bushel.

HIGHLIGHTS

Black Sea Questions: The size and health of the Russian wheat crop this year has seen a number of adjustments by analysts. Research firm SovEcon moved the expected Russian wheat crop size up to 87.2 million metric tons this week, and is being met with questions from other sources, said Jack Scoville of Price Futures Group in a note. "Other private analysts question the big production estimates put forward by SovEcon and other large sources and claim they are way too large," Scoville said. He points to less-than-ideal weather conditions in Russia as the reason for the doubts. Weather issues are also impacting U.S. wheat acres, influencing CBOT futures.

Expanding Size: Crop sizes out of Brazil and Argentina are seen as growing, which may increase the competition against U.S. grain exports. Thursday's report from Brazilian crop agency Conab showed an increased outlook for both corn and soybean crops — with soybeans up to 171.5 million metric tons from 169.7 MMT previously projected, and corn to 139.7 MMT from 137.0 MMT previously. Corn in Argentina may also have a record production year, coming at the expense of soybean acres there. China's apparent disinterest in buying U.S. exports is also crimping domestic export demand forward, RJO Futures said in a note - with the USDA's weekly export sales report showing mostly weak export sales to start the new marketing year.

Looking to Tomorrow: Traders mostly looked towards Friday's WASDE report from the USDA. In particular, traders think that yields of corn and soybeans may come down more than initially expected. However, whether it will be enough to meaningfully tighten the balance sheet is an open question, said Doug Bergman of RCM Alternatives. "Disappointing early yield reports are pointing to a smaller crop than the USDA is currently forecasting, but with the increase in area we saw in August, there is room in the U.S. corn balance sheet for yield to come down before things are overly tight," said Bergman in a note, referencing corn specifically.

INSIGHTS

Repeat Performance: Cuts to last month's record-sized projections by the USDA for U.S. crops are largely expected by analysts and traders, but it may not take much to get CBOT grain futures to rally, said Brian Pullam of Linn & Associates. "Unless the data from the report is heavily biased one particular way, we may see corn and beans rally tomorrow regardless, " said Pullam. Key to shaping the sentiment around futures is how late-stage weather for U.S. crops has fared, turning largely drier coming into September. Late dryness was a curb to crop sizes last year, Pullam notes, so many analysts expect the same thing may happen this year.

Increasingly Costly: As farmers begin to plan for next spring's acres, rising prices for fertilizer are creating stress for the bottom line, said the American Farmer Bureau Federation in a note. "Farmers are facing a familiar challenge: building budgets and making planting decisions with unpredictable fertilizer markets," said Faith Parum, an economist with the AFBF. Affecting prices this year is the onset of U.S. tariffs on the exports of countries where a lot of fertilizer ingredients come from, including nitrogen and phosphate.

Turning Mild: The NOAA's Climate Prediction Center is increasing its odds to 71% for the current ENSO-neutral climate to transition into a La Niña climate between October and December 2025. "All available models from the North American Multi-Model Ensemble favor La Niña to emerge and persist through the winter," said the NOAA in a notice. A milder and rainier fall into winter comes as U.S. harvest begins, which may slow down harvesting progress. But it may also add valuable soil moisture to crop areas that have dried out in recent weeks.

AHEAD:

• The USDA will release its monthly WASDE report at noon ET Friday.
• The CFTC will release its weekly Commitment of Traders report at 3:30 p.m. ET Friday.
• The USDA will release its weekly Grain Export Inspections report at 11 a.m. ET Monday.
• The USDA will release its weekly Crop Progress report at 4 p.m. ET Monday.

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