DTN Before The Bell Grain Comments

Soy Complex Modestly Higher

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

At 8 a.m. CST, USDA announced 4.0 million bushels (110,000 metric tons) of U.S. soybeans were sold to China for 2017-18. Corn and wheat were slightly lower at the morning break, off to another quiet start while the soy complex was modestly higher.

Other Markets:

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

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Corn:

March corn was down 3/4 cent early Wednesday, and it's not much of a stretch to say that another narrow trading range is probably in the cards with low volume. Corn prices will move again someday, possibly after the first of the year, but for now, traders remain focused on plentiful U.S. supplies and a slow pace of exports. In South America, crop conditions are generally favorable in Brazil, but there is concern that this year's late planting of soybeans may limit the amount of corn that gets planted as a second corn crop. The other concern is Argentina's drier conditions with light rain amounts expected this week. However, none of those concerns are impacting corn prices yet, and the trend in March corn remains down. DTN's National Corn Index closed at $3.15 Tuesday, priced 38 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.

Soybeans:

At 8 a.m. CST, USDA announced 4.0 million bushels (110,000 mt) of U.S. soybeans were sold to China for 2017-18. Earlier, March soybeans were up 3 1/2 cents with concerns about dry weather in Argentina also helping March soybean meal trade up $1.90. Technically, March soybeans took a bearish turn when they broke a new three-month low last week, but soy products have held up better. March soybean meal is holding above its November low of $315.00 and March soybean oil is holding above its three-month low at 32.72 -- both good signs of getting help from demand in these winter months. At the same time, Brazil's crop conditions seem to be doing well overall, while some yield reduction is still possible in Argentina. So heading into 2018, we have a mixed bag of market clues that is still leaning bearish for soybeans. For March soybeans in particular, the trend remains down, but it is interesting that Friday's CFTC report showed commercials net long -- another possible hint of better-than-expected demand. 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 was down a penny early, acting like it's ready for a quiet day. Here in the U.S., winter wheat is the only major crop actually in the ground and this week's cold temperatures may cause some damage. Early Wednesday, sub-zero temperatures dropped as far south as northern Missouri. Western Kansas showed single-digit temperatures with only light snow cover in some areas. The bigger threat for the next crop of winter wheat is apt to come from a lack of moisture, but it is too early yet to make any judgments on how things will look in the spring. For now, Chicago wheat prices are squeezed in the low $4s, between noncommercial traders that are heavily bearish and commercials eager to own wheat at these cheap prices. DTN's National SRW index closed at $3.87 Tuesday, priced 35 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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Todd Hultman