By Kirk Maltais


-Wheat for May delivery fell 2.1% to $5.45 1/4 a bushel, on the Chicago Board of Trade on Tuesday, after the USDA's Crop Progress report showed a winter wheat crop in much better health than it was at this time last year.

-Corn for May delivery fell 1.8% to $4.28 a bushel.

-Soybeans for May delivery fell 0.9% to $11.76 a bushel.


HIGHLIGHTS


Productive Winter: Grains started the day mixed in premarket trading following the USDA's first weekly Crop Progress report after the close of trading Monday. Data points were mostly in-line with expectations and usual planting season trends--with winter wheat notably much better than this time last year at 56% good or excellent condition, up from 28% in April 2023. Near-term weather looks supportive for wheat crops, leaving export demand as the wild card for price movement, said Doug Bergman of RCM Alternatives in a note. Downward momentum stayed in place throughout the day.

Open Questions: Last week's lowered outlook for planted U.S. corn acres in 2024 to 90 million acres--down over 4 million acres from last year--is being met with increased skepticism among traders. "Many in the trade believe that the USDA's acreage estimate of 90 million acres was too low and that some of the unaccounted-for acres will end up being planted to corn," said Tomm Pfitzenmaier of Summit Commodity Brokerage in a note. These doubts are a source of pressure for corn, along with the outbreak of avian flu found in humans and cattle, which are expected to impact corn feed demand.


INSIGHT


Not So Bad: Weakness in the Chinese economy has been a pressure point for commodity futures trading this year, but the turning of China's PMI from showing contraction to showing growth in March is seen as a signal for stronger commodity demand there, said Bill Weatherburn of Capital Economics in a note. "Overall, the China PMIs point to reasonably robust demand for most commodities," he said. In turn, this is expected to mean stronger demand for U.S. grain exports.

Safety Net: Analysts said grains may get a boost in future sessions, thanks to the strength seen in other commodities. "Record gold prices and rising energy values could be the pressure that is starting to underpin the grain complex," said Daniel Flynn of Price Futures Group in a note. Thanks to renewable fuels, higher oil and gas prices have become a source of support for corn and soybeans, the feed source for renewable fuels like ethanol and soyoil.

Draw Down: U.S. ethanol inventories are expected to scale back from last week, according to analysts surveyed by Dow Jones. Analysts forecast for stocks to drop to 25.94 million barrels to 26 million barrels, which would be down from 26.09 million barrels reported by the EIA last week. Last week's figure, which covered ethanol inventories through March 22, was the highest stocks had been in roughly a year. Ethanol demand is a key metric driving U.S. corn consumption.


AHEAD


--The EIA will release its weekly ethanol production and stocks report at 10:30 a.m. ET Wednesday.

--The USDA will release its weekly export sales report at 8:30 a.m. ET Thursday.

--Conagra Brands will release its third-quarter earnings before the stock market opens Thursday.


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


(END) Dow Jones Newswires

04-02-24 1534ET