By Kirk Maltais
-- Wheat for March delivery rose 2.3% to $5.35 1/2 a bushel on the Chicago Board of Trade Wednesday, moving higher in reaction to a weaker U.S. dollar and an existing net short held by fund traders in winter wheat.
-- Corn for March delivery rose 1% to $4.30 3/4 a bushel.
-- Soybeans for March delivery rose 0.7% to $10.74 1/2 a bushel.
HIGHLIGHTS
Competitive Edge: U.S. dollar weakness supported CBOT grain futures Wednesday. A weaker USD typically means that U.S. agricultural products are more competitive on the world export market.
Wheat led the complex higher, ahead of the Federal Reserve's rate decision late in the trading session. The Fed kept rates unchanged as expected, but grains may react overnight and Thursday on Fed Chair Jerome Powell's comments to the press.
"If Powell pushes back against political pressure -- suggesting a firmer stance that defends Fed independence -- this might trigger short-term USD upside, while suggesting support for gradual easing could add to the USD's woes," said Aaron Hill of FP Markets in a note.
Looking for Follow-Through: In his Iowa speech last night, President Trump promised that lawmakers were working on a plan to allow year-round E15 -- 15% ethanol-blended motor fuel -- and were "very close to getting it done."
But analysts Wednesday were unconvinced of what the effectiveness of that plan would be.
"Voluntary E15 is a help to American agriculture, but not a panacea or a large enough of a demand driver to alter prevailing price trends in corn or soybeans," said AgResource in a note.
This kept a lid on grain futures that were otherwise rising on a weaker USD index.
INSIGHT
Going the Distance: Traders sought to squeeze the sizable short position seen in CBOT wheat futures Wednesday, which sent prices higher, said Brian Pullam of Linn & Associates.
Friday's Commitments of Traders Report from the CFTC showed a net short of over 110,000 contracts in soft red wheat among fund traders through Jan. 20, giving room for a short squeeze.
But the fundamental base needed to support higher wheat prices longer-term isn't there, Pullam said.
"Any positive technical outlook can only carry the market so far," he said. "At some point, the markets will need a stronger fundamental trigger to keep the momentum moving higher, and right now I just don't see one."
Dying of Thirst: The Argentinian crop is essentially fully planted, but farmers there are experiencing dry weather, which may take a toll on the health of the emerging crop.
Lower yields are expected if the dry conditions stay in place, said ADM Investor Services in a note, with early planted corn expected to be the most affected as the country's farm belt is missing roughly three inches of rainfall.
Pared Back: Average daily production of ethanol in the U.S. inched lower from the prior week, according to EIA data. The EIA said Wednesday that average daily production was 1.114 million barrels a day for the week ended Jan. 23. That is down 5,000 barrels a day from the prior week's figure, and is a small move compared to the nearly 100,000 barrel-a-day change seen earlier this month.
Ethanol inventories also fell, dropping 361,000 barrels to 25.4 million barrels for the week.
AHEAD
-- Valero Energy Corp. is scheduled to release its fourth-quarter earnings report at 6:30 a.m. EST Thursday.
-- Tractor Supply Co. is due to release its fourth-quarter earnings report at 6:55 a.m. EST Thursday.
-- The USDA is scheduled to release its weekly export sales report at 8:30 a.m. EST Thursday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
01-28-26 1524ET
