By Kirk Maltais

--Wheat for March delivery fell 1.4%, to $7.29 a bushel, on the Chicago Board of Trade on Tuesday, in reaction to speculation that Friday's WASDE will show growing wheat supplies globally.

--Corn for March delivery fell 0.5% to $6.37 1/2 a bushel.

--Soybeans for January delivery rose 1.2% to $14.55 a bushel.

HIGHLIGHTS

World Situation in Flux: Production of world wheat hinges on how the crop year goes for Argentina and Australia, said Commerzbank in a note. The firm says the Argentina crop is being tested by drought conditions, which may cause expected exports for the 2022/23 crop year to be down from current estimates of 10 million tons published by the USDA last month . Meanwhile, in Australia, a record wheat crop could be around the corner, with the government there estimating the crop size at 36.6 million tons - a 14% uptick since September. The USDA's WASDE report on Friday is expected to bring more clarity to the situation.

Caught Off-Guard: An uptick in soymeal futures - with the contract climbing 4% - had traders on their heels today. Weather problems in South American growing areas like Argentina and Paraguay are supportive for the soybean complex as a whole, but the decline in soybean oil following the EPA's proposal for only a small uptick to renewable fuel volumes in 2023 has many traders shifting over to soymeal instead.

INSIGHTS

Expected to Grow: Analysts surveyed by The Wall Street Journal forecast that stockpiles of grains will show growth in Friday's WASDE report. For the 2022/23 marketing year, corn stocks are expected to rise to 1.24 billion bushels, while soybeans are expected to rise to 236 million bushels, and wheat is seen climbing to 578 million bushels. Meanwhile, the USDA is forecast to raise its outlook for world stocks only slightly - with corn up 10 million tons, soybeans unchanged, and wheat down 8 million.

Eyes on the Prize: Demand for U.S. grains is expected to be another key thing traders will hone in on once they obtain a copy of the WASDE report. "The USDA is in the habit of holding off from making US production changes in the December report," says Marex in a note. "However, the demand side of the report can change, and production outside of the U.S. can be tweaked." The firm adds that export sales projections will likely be adjusted lower as current prices are still unattractive for global buyers - this while the USDA may alter the production outlook for countries like Argentina and Ukraine.

Sour Mood: Sentiment among U.S. farmers through November stayed steady, with a survey performed by Purdue University and the CME Group remaining unchanged from the previous month. The mid-term elections did little to assuage uneasiness among farmers, said the group - leaving them with a lot of concerns about how they may fare next year as grain prices turn back to levels seen before the Russia-Ukraine conflict began. Farmers are worried that their farms may experience a bite from high input costs next year, which in turn may impact their yields and profit. "Rising interest rates combined with high input and energy costs are creating a lot of uncertainty at the farm level," said James Mintert of Purdue in a note. Farmers are also increasingly worried about buying new machinery to run on their land, citing high costs.

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.

--The USDA will release its monthly world supply and demand report at noon ET Friday.

--The CFTC will release its weekly commitment of traders report at 3:30 p.m. ET Friday.

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

(END) Dow Jones Newswires

December 06, 2022 15:20 ET (20:20 GMT)