DTN Before The Bell Grain Comments

Morning CME Globex Update:

At 8 a.m. CST, USDA announced Mexico bought 5.3 million bushels (134,148 metric tons) of U.S. corn for 2017-18. U.S. grain markets return from the Christmas holiday to find frigid temperatures across the Midwest and snow falling in northern Kansas, but this week's forecast remains mostly dry for the rest of the region.

Other Markets:

Dow Jones:	Lower
U.S. Dollar Index:	Higher
Gold:	Higher
Crude Oil:	Higher

Corn:

At 8 a.m. CST, USDA announced Mexico bought 5.3 million bushels (134,148 mt) of U.S. corn for 2017-18. March corn finished with a slight gain on Friday, a fourth consecutive close higher, which has raised prices up a nickel from their $3.46 1/2 low for the year. The fundamental view of corn hasn't changed in months with traders focusing on USDA's ending stocks estimate of 2.4 billion bushels for 2017-18 and also seeing corn exports far below last year's pace. Friday's CFTC data showed noncommercials a little more bearish in corn on Dec. 19, increasing net shorts from 75,849 to 92,972. Commercials increased net longs to 72,774, still finding attractive value in the mid $3s. The one unusual thing happening in the corn market is Brazil's FOB price has jumped significantly since mid-December and is now trading at $4.24 a bushel, 25 cents above the FOB price at the U.S. Gulf and a possible sign of improved U.S. export business ahead. For now, the trend in March corn remains down, but may have finally found its seasonal low. DTN's National Corn Index closed at $3.15 Friday, priced 37 cents below the March contract and near its highest price in four months. In outside markets, the March U.S. dollar index is up 0.01, off to a quiet start while February gold is up $7.00.

Soybeans:

After falling lower for 11 of the past 12 sessions, March soybeans ended with a small gain Friday, but that doesn't mean the bearish risk is gone. Brazil continues to receive rain over its major crop areas and has more expected in this week's forecast while the outlook for Argentina remains drier. The past few days, beneficial rains were received in Paraguay and southern Brazil. Friday's CFTC data showed noncommercials in soybeans cut back their bullish positions for the second consecutive week, reducing net longs from 55,245 to 10,282. With March soybeans below $9.70 on Dec. 19, commercials turned net long 29,127 contracts, an early favorable response to prices at their lowest levels in over three months. With South American weather still the main driver of soybean prices, the trend in March soybeans remains down. DTN's National Soybean Index closed at $8.81 Friday, priced 68 cents below the January contract and near its lowest price in over two months.

Wheat:

March Chicago wheat was last seen down 2 1/4 cents on Friday, but managed a modest gain for the week, bringing prices up roughly 14 cents above their $4.10 1/2 low of the year. Like corn, wheat prices face an uphill battle against abundant supplies but have reached cheap enough levels where commercials are finding attractive value. Friday's CFTC data showed noncommercial traders still bearish in Chicago wheat on Dec. 19, holding 98,684 net shorts while commercials stay with 99,085 net longs. Dry conditions in the western Plains may offer some bullish influence in early 2018 as the Climate Prediction Center expects drought to expand south of southern Kansas. However, it is too early for traders to be concerned yet. For now, the trend in winter wheat remains down. DTN's National SRW index closed at $3.89 Friday, priced 36 cents below the March contract and up from its lowest price in seven months.

Todd Hultmancan be reached at todd.hultman@dtn.com

FollowTodd on Twitter @ToddHultman1

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