By Kirk Maltais

  • Wheat for September delivery rose 2% to $6.01 a bushel on the Chicago Board of Trade Wednesday, as traders further digested yesterday's USDA reports and speculate that world wheat supply may turn thinner on weather issues this year.
  • Corn for December delivery rose 1.6% to $4.43 a bushel.
  • Soybeans for November delivery rose 0.5% to $11.49 1/2 a bushel.

HIGHLIGHTS

Mulling Things Over: Tuesday's USDA reports were still a focus for grain traders today. Wheat futures lead the CBOT higher on projections of a tighter supply/demand picture globally, due to a shortfall in U.S. winter wheat along with heat issues in France and potential issues with the Russian crop. However, analysts caution that yesterday's reports alone are not enough to support a full-fledged rally. "Traders still need a stronger bullish fundamental story for a sustained rebound, especially with weather forecasts supporting strong yield potential," said Joe Davis of Futures International in note.

Question Mark: Whether or not China follows through on promises to purchase more U.S. soybeans tempered those futures Wednesday, and are expected to continue being felt on the contract until clarity surfaces. Domestic need for soybean oil is partly offsetting the missing Chinese demand for underlying soybeans. "The U.S. [has] less available exportable supply amid the rapid expansion in crush capacity in response to supportive EPA policy driving record biofuel demand," said Mike Castle of StoneX in a note. Should Chinese demand return, then "we could be looking at a much tighter supply story given the increased competition in the domestic market," Castle said.

INSIGHT

Negotiation Tools: USTR Jamieson Greer confirmed this afternoon that the U.S. has opted not to renew the USMCA "in its current form." But he also said that the U.S. "will continue to engage with Mexico and Canada to address the Agreement's shortcomings," a sign that the deal is not dead in the water, according to analysts. The existing terms of the deal last into the next decade, but the U.S. is likely using this decision as a way "to keep pressure" on Mexico and Canada, said Jim Wiesemeyer of Ag Bull in a note published before USTR Greer confirmed this decision. The automotive industry is at the center of the current dispute around the deal, but risk is there for other market segments like agriculture, said Wiesemeyer.

Unseen Limits: The lack of surprises from Tuesday's USDA reports sustained prices Wednesday, but that support isn't expected to stay for long, said Matt Zeller of StoneX. "Volume/enthusiasm looks weak to start the month of July," said Zeller in a note. "The bulls need a better fundamental story than that for a real bounce, but weather forecasts and thus yield potential look strong going forward."

AHEAD

  • The USDA will release its weekly export sales report at 8:30 a.m. ET Thursday.
  • The USDA and CBOT will be closed in observance of the Independence Day holiday on Friday, both reopening on Monday.
  • The USDA will release its weekly Grain Export Inspections report at 11 a.m. ET Monday.
  • The USDA will release its weekly Crop Progress report at 4 p.m. ET Monday.
  • The CFTC will release its weekly Commitment of Traders report at 3:30 p.m. ET Monday.

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