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3 Big Things Today, May 23, 2022

Wheat Futures Jump Overnight; Investors Raise Net-Longs in Soybeans

1. Wheat Futures Jump in Overnight Trading

Wheat futures surged and corn and soybeans were higher in overnight trading amid ongoing weather woes globally.

Little or no rain has fallen in much of the U.S. Southern Plains, where hard-red winter wheat is growing in the past 14 days, according to data from the National Weather Service's precipitation page.

About 66% of Kansas, the biggest producer of winter wheat, was suffering from drought conditions as of May 17, according to the U.S. Drought Monitor. About 4.1% was seeing exceptional drought – the worst possible rating – up from only 2% a week earlier.

In Oklahoma, the second-largest producer of winter varieties, 54% of the state was seeing drought, the monitor said. About 10% suffered from exceptional drought for a second week in a row.

It's not just the U.S. that's suffering from dry weather.

Showers in Argentina likely will be too light for germination in half the country's wheat-growing areas in the next two weeks, according to data from Commodity Weather Group.

About a third of the Wheat Belt in western Europe remains short on precipitation, though some rain may fall next week that will aid wheat heading and corn growth, the forecaster said.

Investors continue to wait and see if Ukraine will resume shipments as Russian attacks on the country persist. United Nations Secretary-General Antonio Guterres said last week that he was holding talks with several countries including Ukraine and Russia to restart shipments of wheat to alleviate global hunger.  

Still, no deal was made, leaving grain in ports and fields in both countries.  

Wheat for May delivery jumped 21 3/4¢ to $11.90 ½ a bushel overnight on the Chicago Board of Trade while Kansas City futures surged 18 3/4¢ to $12.71 ½ a bushel.

Corn futures were up 4 1/2¢ to $7.83 ¼ a bushel.

Soybean futures for July delivery added 6 1/4¢ to $17.11 ½ a bushel. Soymeal lost $2.20 to $427.70 a short ton, while soybean oil futures gained 0.91¢ to 81.84¢ a pound.

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2. Investors Raise Net Longs on Beans, Cut Bullish Bets on Corn

Money managers raised their net-long positions, or bets on higher prices, in soybeans last week while reducing their bullish bets on corn to the lowest in almost six months, according to data from the Commodity Futures Trading Commission.

Investors held a net-142,029 soybean futures contracts in the seven days that ended on May 17, up from 126,551 contracts a week earlier, the CFTC said in a report.

Speculators, however, reduced their holdings in corn, resulting in a net-long position of 312,365 futures contracts.

That's down slightly from the 313,391 contracts a week earlier and the smallest such position since Nov. 30, the agency said.

In wheat, hedge funds and other large investors held 46,103 hard-red winter wheat futures contracts last week, up from 41,948 contracts seven days earlier and the largest bullish position since April 19.

Investors also held a net-31,456 soft-red winter-wheat contracts as of May 17, up from 15,913 contracts a week earlier, the CFTC said in its report.

The weekly Commitment of Traders report from the Commodity Futures Trading Commission shows trader positions in futures markets.

The report provides positions held by commercial traders, or those using futures to hedge their physical assets; noncommercial traders, or money managers (also called large speculators); and nonreportables, or small speculators.

A net-long position indicates more traders are betting on higher prices, while a net-short position means more are betting futures will decline.

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3. Freeze Warnings in Effect in Northern Wisconsin and Michigan

Freeze warnings and frost advisories have been issued for much of northern Wisconsin and the northern half of Michigan, according to the National Weather Service.

In northern Michigan, temperatures overnight were expected to fall as low as 25 degrees Fahrenheit, the NWS said in a report early this morning.

In parts of Wisconsin, temperatures likely fell as low as 27 degrees.

Further south, flooding is forecast in parts of central and southern Kansas due to excessive rainfall tonight through Tuesday evening, the agency said. From 2 to 4 inches of rain are expected tonight into tomorrow.

"Excessive runoff may result in flooding of rivers, creeks, streams and other low-lying and flood-prone locations," the NWS said. "Creeks and streams may rise out of their banks."

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