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3 Big Things Today, May 9, 2022

Wheat Futures Rise Overnight; Investors Reduce Bullish Best Across the Board.

1. Wheat Futures Surge in Overnight Trading

Wheat futures were higher in overnight trading on concerns about dry weather in the U.S. southern Plains, while corn and soybeans were lower on favorable planting conditions.

Red-flag warnings – an indicator of strong winds, low humidity, and in general very dry conditions – have been issued for the southern Plains where hard-red winter wheat is attempting to grow, according to the National Weather Service.

About 68% of Kansas, the biggest U.S. producer of winter wheat, was suffering from drought conditions last week, data from the U.S. Drought Monitor show. Roughly 1.9% was seeing exceptional drought, the worst rating on the monitor’s scale.

In Oklahoma, 65% of the state was seeing drought, the monitor said. Slightly more than 10% was suffering from an exceptional drought.

Little or no rain has fallen in southwestern Kansas and the Oklahoma and Texas panhandles in the past week, according to the NWS’s precipitation page.

Only 27% of the U.S. winter-wheat crop was in good or excellent condition last week, down from the 48% that received top ratings a year earlier, according to the Department of Agriculture.

The USDA is scheduled to release its weekly crop progress report today.

Corn and soybeans plunged overnight as dry weather is forecast for much of the Midwest, which will allow farmers to accelerate planting.

Dry weather is forecast for much of this week in Iowa and Illinois, the top producers of both corn and soybeans in the U.S.

That should help producers with planting that’s been delayed by excessive rainfall this spring.

Some 14% of the U.S. corn crop was planted last week, down from the prior five-year average of 33%, the USDA said; 8% of soybeans were in the ground, trailing the average of 13% for this time of year.

Wheat for May delivery jumped 14¼¢ to $11.22¾ a bushel overnight on the Chicago Board of Trade while Kansas City futures surged 21¾¢ to $11.92¼ a bushel.

Corn futures dropped 10¢ to $7.74¾ a bushel.

Soybean futures for July delivery lost 13¢ to $16.09 a bushel. Soymeal fell $4.80 to $408.80 a short ton, while soybean oil futures declined 0.31¢ to 80.59¢ a pound.

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2. Speculative Investors Reduce Bullish Bets on Corn, Beans, and Wheat

Money managers cut their net-long positions, or bets on higher prices, in corn and beans in the seven days that ended on May 3, according to the Commodity Futures Trading Commission.

Investors held a net-327,802 corn futures contracts last week, the CFTC said in a report.

That’s down from 338,594 contracts a week earlier and the smallest bullish position since February 15.

Speculators held 148,011 soybean futures contracts last week, down from 166,688 contracts the previous week and the smallest such position since the seven days that ended on January 25, the government said.

In wheat, hedge funds and other large investors held 39,537 hard-red winter contracts down from 44,881 contracts the previous week, marking the smallest bullish position since February 15.

Investors held a net-10.702 soft-red winter wheat futures last week, down from 14,970 contracts seven days earlier. That’s also the smallest such position since March 1, the CFTC said in its report.

The weekly Commitments 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. Extremely Dry Weather Forecast in the Southern Plains Monday

Red-flag warnings have been issued for much of the southern Plains west into parts of southern Nevada, while strong winds are forecast for parts of the western Corn Belt, according to the National Weather Service.

In southwestern Kansas, winds will be sustained from 15 to 25 mph with gusts of up to 40 mph expected today, the NWS said in a report early this morning.

Relative humidity will drop as low as 7%.

“We skip forward to July or August on Monday, with afternoon temperatures averaging about 20˚F. above normal,” the agency said. “Southwest winds and very dry air will combine to continue fire danger Monday afternoon.”

In the Oklahoma and Texas panhandles, winds from 20 to 30 mph are expected with gusts of up to 40 mph. Humidity will drop as low as 6% today.

In parts of South Dakota and Minnesota, meanwhile, wind advisories have been issued for today with gusts of up to 50 mph in the forecast, the NWS said.

“Gusty winds could blow around unsecured objects,” the agency said. “Tree limbs could be blown down and a few power outages may result.”

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