DTN Closing Grain Comments

Outside Markets Pressure Commodities Lower

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

General Comments:

Corn was down 2 3/4 cents in the March contract and down 3 cents in the December. Soybeans were down 9 cents in the March contract and down 7 1/2 cents in the November. Wheat closed down 6 1/2 cents in the March Chicago contract, down 1 1/2 cents in the March Kansas City and down 2 cents in the March Minneapolis contract.

The March U.S. dollar index is up 0.30 at 84.34. April gold is down $0.20 at $1,337.10 while March silver is down 1 cent and March copper is up $0.0255. The Dow Jones Industrial Average is down 536 points at 24,985. March crude oil is down $1.51 at $63.94. March heating oil is down $0.0349 while March RBOB gasoline is down $0.0222 and March natural gas is down $0.096.

Corn:

March corn closed down 2 3/4 cents at $3.58 3/4 Monday, escaping the day with a modest loss while investors moved to cash, prompted by concerns about rising interest rates and falling stock prices. Closer to the corn market itself, Argentina had another hot and dry weekend that is expected to continue through Wednesday before a chance of light rain appears. True to this year's pattern, central Brazil received more rain over the weekend but is drier on Monday, helpful for soybean harvest and second corn planting. Monday morning, USDA said 42.3 million bushels (mb) of corn were inspected for export last week, putting the total down 33% in 2017-18 from a year ago. USDA also said 5.1 mb (130,000 metric ton) of U.S. corn were sold to South Korea for 2017-18 -- the sixth announced corn sale in the past seven trading sessions. Friday's CFTC data showed noncommercials turned slightly bullish as of Jan. 30, taking on 13,754 net longs for the first time since August. Commercials took advantage of corn's highest close in two months and traded 58,168 net longs for 21,012 net shorts. March corn is trading near the upper end of its three-month range, in line with its seasonal tendency, with resistance waiting at $3.65. In a related market, Dow Jones reported over the weekend China is investigating possible anti-dumping charges on imports of U.S. sorghum. DTN's National Corn Index closed at $3.31 Friday, priced 31 cents below the March contract and at its highest price in five months. In outside markets, the March U.S. dollar index is up 0.30, representing one form of flight to safety while the Dow Jones Industrial Average is down 536 points.

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Soybeans:

March soybeans finished the day 9 cents lower at $9.69 3/4, pressured by skittish investors raising cash and the anticipation of a 4.0 billion bushel (bb) harvest on the way from Brazil. At the same time, Argentina's crop conditions remain a concern after another hot and dry weekend that is expected to continue another few days with triple-digit temperatures in some of Argentina's growing regions. A chance for light showers are in the back end of the five-day forecast but won't offer much help to dry crops, and USDA may reduce Argentina's crop estimate in Thursday's WASDE report. USDA said Monday morning 47.9 mb of soybeans were inspected for export last week, keeping the total down 14% in 2017-18 from a year ago. USDA also added that 7.3 mb (198,600 mt) of U.S. soybeans were sold to unknown destinations. 4.85 mb (132,000 mt) were for 2017-18 and the remainder was for the following season. While Brazil's next crop remains a bearish influence, commercials staying net long in soybeans continues to offer support. Friday's CFTC data showed noncommercials cut net shorts in soybeans back from 67,090 to 12,799 as of Jan. 30. Commercials reduced their net longs, but still hold 59,188 contracts, a sign of continued support in the mid-$9s. The short-term trend in March soybeans has turned lower, but the overall trend remains broadly sideways with long-term support for spot prices at $9.00. DTN's National Soybean Index closed at $9.10 Friday, down from its highest in over a month and priced 69 cents below the March contract.

Wheat:

March Chicago wheat fell 6 1/2 cents to $4.40 1/4 Monday while March Kansas City wheat was down 1 1/2 cents at $4.61 3/4, both pressured by investor nervousness in the financial markets and Monday's higher U.S. dollar. As far as winter wheat goes, the seven-day forecast has heavy rain in store for the Delta, moderate amounts for the eastern Midwest, and little expected for the western U.S. Plains. Friday's CFTC data showed noncommercials in Chicago wheat covered roughly half their net shorts as of Jan. 30, going from 95,971 to 47,294. Commercials took advantage of the highest wheat prices in over three months and reduced futures positions to 49,548 net longs, still a modest show of support for prices in their mid-$4s. Earlier Monday, Statistics Canada estimated all wheat stocks at 23.56 million metric tons (mmt) on Dec. 31, down a little from 24.09 mmt the previous year, but still representing significant competition for the U.S. Monday morning, USDA said 15.7 mb of U.S. wheat were inspected for export last week, putting total inspections down 5% in 2017-18 from a year ago. It may be more difficult to rally wheat prices now that half the bearish traders are out, but so far, the trend in winter wheat remains up. DTN's National SRW index closed at $4.17 Friday, priced 30 cents below the March contract and down from its highest price in five months. DTN's National HRW index closed at $4.22, down from its highest price in six months.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman