In the latest trading session, wheat futures experienced a decline as the U.S. harvest progresses and the outlook for Russian grain production improves. As of this week, 76% of the U.S. winter wheat crop has been harvested, marking an increase from 71% the previous week and surpassing the five-year average of 72%, according to the United States Department of Agriculture (USDA).

Earlier this month, the USDA adjusted its forecast for global wheat stockpiles, raising the estimate for the end of the 2024/2025 marketing year to 257.2 million metric tons, up from 252.3 million tons. Additionally, U.S. inventories were revised upwards to 23.3 million metric tons from 20.6 million metric tons in the prior month.

On the other hand, Russian grain production, which faced challenges from dry weather and frost earlier in the growing season, is now expected to be more robust than initially anticipated. Consultant SovEcon has raised its forecast for Russian grain output to 130.5 million metric tons, an increase from 127.4 million tons. The forecast for wheat production has also been adjusted upward to 84.2 million tons.

In the Chicago Board of Trade (CBOT), wheat futures for September delivery fell by 3 cents to settle at $5.44 per bushel. Kansas City futures also dropped, losing 4¾ cents to reach $5.62¾ per bushel. Meanwhile, corn futures for December delivery saw a slight increase of ¾ cent, bringing the price to $4.18¾ per bushel. On the other hand, soybean futures for November delivery decreased by 2 cents to $10.61 per bushel. Soy meal prices dropped by 50 cents, settling at $320.10 per short ton, while soy oil fell by 0.16 cents to 43.94 cents per pound.

In related news, the production of ethanol has seen a decline in the week ending July 19, as reported by the Energy Information Administration (EIA). The average production of this biofuel has decreased to 1.095 million barrels per day, down from 1.106 million barrels the previous week. The Midwest, which is the largest producing region, reported an output drop to 1.035 million barrels from 1.046 million barrels in the prior week.

Production on the Gulf Coast fell to 26,000 barrels per day, down from 28,000, while the West Coast output decreased to 9,000 barrels from 10,000 barrels the previous week. The East Coast maintained a steady output of 12,000 barrels per day, while the Rocky Mountain region saw an increase to 12,000 barrels, up from 10,000 barrels the week before.

Ethanol stockpiles have surged to 23.723 million barrels, the highest level since May 17, and an increase from 23.16 million barrels the previous week, indicating a robust supply despite the production drop.

Weather conditions are also playing a crucial role in agricultural production as excessive heat warnings, red flag warnings, and heat advisories have been issued for parts of Montana and western North Dakota and South Dakota. The National Weather Service (NWS) has forecasted heat indexes reaching up to 108°F in central and eastern Montana, with temperatures in the 90s expected in surrounding areas.

This combination of factors, including the ongoing harvest, shifting production forecasts, and extreme weather conditions, is likely to influence market dynamics and agricultural strategies in the coming weeks. As traders and farmers navigate these changes, the agricultural sector remains vigilant in responding to evolving conditions.