By Kirk Maltais


-- Corn for December delivery rose 2.3% to $4.90 1/2 a bushel on the Chicago Board of Trade on Wednesday, with traders responding to photos from the Pro Farmer Midwest Crop Tour showing some corn ears damaged by excessive heat and dryness.

-- Wheat for December delivery rose 2% to $6.39 3/4 a bushel.

-- Soybeans for November delivery rose 1.1% to $13.60 1/2 a bushel.


HIGHLIGHTS


Photographic Evidence: CBOT grain futures caught a lift at midday as grain traders saw the photos of corn ears and soybean pods with varying degrees of damage hitting X (formerly known as Twitter).

While crop scouts did encounter many robust fields, they also found fields with problems including tipping, tar spot disease, and bone-dry soil.

"They're seeing an increased frequency of problem fields with lower yield potential to the point that one can make a case for USDA's corn and soybean yields to slip lower," said Arlan Suderman of StoneX in a note.

Soybeans are still in the processing of filling out pods, making the upcoming weather more critical to their growth.


Stifling Heat: Grain traders took the opportunity to buy back into cheaply priced contracts, particularly for corn. Both the front-month contract and the most-active contract are oversold, said AgriSompo in a note, adding that a new heat wave hitting corn crops is a factor giving traders confidence in a turnaround.

"December corn continues to struggle, but the blast of heat will hasten maturity and could cut into yields," the firm said.


INSIGHT


Breathing Room: The surge in the ICE US dollar index since mid-July has been a pressure point for commodity traders, as a stronger dollar is seen as hampering export demand for US commodities. The index is down 0.2% this afternoon, allowing time for commodities such as grains, softs and precious metals to rebound.

Even so, commodity strength may be short-lived, ahead of a speech by Federal Reserve Chairman Jerome Powell on Friday at the central bank's summer forum held in Jackson Hole, Wyo.

"If Powell is hawkish on Friday, and rates return to their climb -- the dollar can move up meaningfully and that can be a problem," said Sterling Smith of AgriSompo.


Good, Not Great: Crops in Nebraska are showing improvements over last year's drought-stricken output, but dryness continues to keep yields below the multiyear average. According to surveys by Pro Farmer's Midwest Crop Tour released Tuesday, corn fields in Nebraska showed an average yield of 167.22 bushels per acre. That is up 5.5% from last year, but still down 2.8% from the prior three-year average.

Soybean pod counts in the state also showed signs of improvement with the average count in a three-foot by three-foot row being 1,160 pods. That is up 9.1% from last year, but down 3% from the prior three years.


Tumbling Down: Both daily production of ethanol in the U.S. and total inventories declined through the week ended Aug. 18, according to the EIA. Average daily ethanol production was 1.048 million barrels, down from 1.069 million barrels the previous week.

The pullback is larger than the Dow Jones survey predicted, with analysts estimating production between 1.058 million barrels a day and 1.065 million barrels a day.

Inventories dropped back below the 23 million-barrel mark to 22.79 million barrels, down from 23.44 million barrels. Some analysts surveyed this week had expected a decline in inventories, but not below 23 million barrels.


AHEAD


-- The USDA is scheduled to release its weekly export sales report at 8:30 a.m. EDT Thursday.

-- The U.S. Drought Monitor is due to release its updated map at 8:30 a.m. EDT Thursday.

-- The USDA is scheduled to release its monthly livestock slaughter report at 3 p.m. EDT Thursday.


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


(END) Dow Jones Newswires

08-23-23 1544ET