DTN Closing Grain Comments

Bearish Wheat Traders Have Second Thoughts

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN illustration by Nick Scalise)

General Comments:

Corn was up 1 cent in the March contract and up 1 cent in the July. Soybeans were down 3 cents in the March contract and down 2 3/4 cents in the July. Wheat closed up 5 3/4 cents in the March Chicago contract, up 5 1/2 cents in the March Kansas City, and up 10 1/4 cents in the March Minneapolis contract. The March U.S. dollar index is down 0.21 at 92.59. February gold is up $5.00 at $1,292.50 while March silver is up 17 cents and March copper is down $0.0035. The Dow Jones Industrial Average is up 16 at 24,762. February crude oil is down $0.39 at $59.58. February heating oil is up $0.0088 while February RBOB gasoline is up $0.0021 and February natural gas is up $0.079.

Corn:

March corn is up a penny at $3.53 3/4, simultaneously staying quiet while sneaking higher for a sixth consecutive day, putting a little more distance between the current price and the 2017 low of $3.46 1/2. We can't say the corn market is fundamentally changing much these days, but it is likely that traders' focus is shifting away from the fall's big harvest and more toward the pros and cons of demand. On the pro side, livestock production is expected to expand again in 2018 and ethanol production continues at a high pace. FOB corn prices in Brazil have jumped 33 cents since mid-December to $4.24 and that should help U.S. corn exports pick up soon, but so far, U.S. corn shipments are still low. For now, the trend in March corn remains down but should be near support, helped by commercial net longs. National Corn Index closed at $3.15 Tuesday, priced 37 cents below the March contract and at its highest price in four months. In outside markets, the March U.S. dollar index is down 0.21 and other commodities are mixed. February gold is up $5.00.

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Soybeans:

March soybeans closed down 3 cents at $9.67 1/2, giving back part of Tuesday's 10 1/4 cent gain while traders continue to keep an eye on South American weather. As we head toward the turn of the calendar, crop conditions look generally favorable across Brazil with more rain expected in this week's forecast and a chance for record yields in Mato Grosso. There have been minor concerns of dry conditions in Argentina, but timely rains came through last week and light to moderate amounts are expected this week. On the other side of the coin, DTN's index of national cash soybean prices is only down 40 cents in a year that saw record harvests from Brazil and the U.S. For now, the trend in March soybeans remains down and keep in mind that commercials turned net long last week. DTN's National Soybean Index closed at $8.91 Tuesday, priced 68 cents below the January contract and up from its lowest price in over two months.

Wheat:

March Chicago wheat closed up 5 3/4 cents Wednesday, helped by a combination of commercial buying and noncommercials lightening their short positions while the southwestern U.S. Plains gets several doses of bitter cold temperatures this week. Parts of western Kansas and the Texas Panhandle show light snow cover, but with conditions staying dry, there is not much protection for dormant winter wheat crops. While the situation is just bullish enough to prompt some local short-covering, it is difficult to expect too much of a rally. U.S. wheat production only accounted for 6% of the 2017 total and the world has plenty on hand. Winter wheat prices are getting a late-season boost, but still remain in a downtrend. DTN's National SRW index closed at $3.87 Tuesday, priced 36 cents below the March contract and up from its lowest price in seven months. DTN's National HRW index closed at $3.70, near its highest price in two months.

Todd Hultman can be reached at todd.hultman@dtn.com

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman