GRAIN HIGHLIGHTS: Top Stories of the Day

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TOP STORIES:

Wheat Turns Lower as Traders Take Profits

Wheat for December delivery fell 2% to $5.95 1/4 a bushel, on the Chicago Board of Trade Thursday, with grains traders opting to lock-in recent profits in futures ahead of tomorrow’s WASDE report. Corn for December delivery fell 0.5% to $3.87 a bushel. Soybeans for November delivery fell 0.1% to $10.50 a bushel.

After jumping to over $6 per bushel and hitting a high not seen since June 2015, profit-takers descended on wheat futures Thursday. “The U.S. wheat market has forged a reversal from 5-year highs as traders are having difficulty couching the loss of a crop that won’t be harvested until next July,” said AgResource. However, if rainfall doesn’t quench Russia and the U.S. dryness and tomorrow’s WASDE report doesn’t contain bearish surprises, wheat futures may resume their climb. “There’s no shortage of wheat now, but what happens in the winter and next year?” said Dan Basse of AgResource.

Food Price Index Hits Highest Level in Seven Months -UN FAO

Global food prices continued to climb higher in September, supported by rebounding demand and concerns that dry weather could harm crop harvests, the United Nations’ Food and Agriculture Organization said Thursday.

The UN FAO’s Food Prices Index, which tracks the price of a basket of the most common foodstuffs such as grains, vegetable oils, and meat, rose 2.1% in September to its highest level since February.

The overall rise in food prices was driven mainly by cereals and vegetable oils. Both foodstuffs experienced strong demand in September as well as concerns surrounding supply, which helped push prices higher.

STORIES OF INTEREST:

WASDE Expected to Show Slide in Grain Production — Market Talk

11:07 ET – Estimates for US grain production, while still strong, are expected to slide in the USDA’s next WASDE report due out Friday. Analysts surveyed by The Wall Street Journal say that they expect the USDA to show corn production at 14.8 billion bushels in the 2020/21 marketing year on a yield of 177.6 bushels per acre — both figures down from the previous month’s estimates. Meanwhile, soybean production is expected to be pegged at 4.29 billion bushels on a yield of 51.7 bushels per acre, also both down from last month’s projections. Should cuts to production exceed these figures, then the upward momentum of grains futures may continue. (kirk.maltais@wsj.com; @kirkmaltais)

USDA Invests in Effort to Increase Biofuel Sales — Market Talk

13:43 ET – The USDA says it has invested $22M out of an allotted $100M into the Higher Blends Infrastructure Incentive Program–an initiative designed to increase ethanol-storage capacity at gas stations across 14 states. The building of infrastructure at these gas stations is estimated to add to US ethanol demand by nearly 150M gallons yearly, the USDA says–with the remaining allotment for the program expected to raise that figure exponentially. Domestic ethanol demand is a key source of consumption for US corn, with the coronavirus pandemic this year causing many refineries to idle or shut down. (kirk.maltais@wsj.com; @kirkmaltais)

Pontifax AgTech Closes Second Fund at $302 Million

Pontifax AgTech Management has closed its sophomore fund at nearly three times the size of its debut vehicle.

Pontifax Global Food and Agriculture Fund II closed at $302 million, just above the fund’s $300 million hard cap, the firm said Thursday. The predecessor fund closed in 2017 with $105 million.

THE MARKETS:

Hog Futures Up For Fourth Straight Session — Market Talk

15:11 ET – Lean hog futures trading on the CME finished Thursday with a fourth consecutive gain–closing up 3.5% at 66.85 cents per pound. It’s the highest hog futures have finished in nearly a month, and grains traders say the contract has room to move higher in the short term. “The huge discount of futures to the cash market along with a continued advance in pork values are seen as positive forces,” says RJO Futures. Live cattle futures, on the other hand, closed Thursday down 0.4% to $1.12625 per pound. (kirk.maltais@wsj.com; @kirkmaltais)

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