DTN Before The Bell Grain Comments

Morning CME Globex Update:

The grain and oilseed futures markets experienced increasing pressure throughout the early part of Tuesday morning, as the U.S. Dollar Index turned higher and energy futures weakened. Motivated by ongoing drought, KC wheat futures remained the leader of the grains.

Other Markets:

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

Corn:

Old crop corn futures started Tuesday morning in a lightly higher range, which was in line with their recent trend, but a stronger turn in the U.S. Dollar Index and some inflation anxiety in the U.S. stock indices could weigh on the grains throughout the day. Presidential tweaks to the Renewable Fuel Standards, which might allow for expanded ethanol sales domestically and internationally, will be discussed with an influential group of senators Tuesday. Headlines coming out of that meeting could spark some fluctuations in corn futures one way or another throughout the week, but otherwise, the continuous corn chart appears to be stabilizing below the $3.70 level. The DTN National Corn Index, an average of cash bids around the country, was $3.39 Monday, showing that the national average basis level remains at 29 cents under the March futures contract. First notice day for March grain futures contracts will be Wednesday, February 28. At 8 a.m. USDA announced 130,000 mt of corn sold to unknown destinations for 2017-2018 delivery.

Soybeans:

With only two trading sessions left in the month of February, it looks like the spring crop insurance price reference level for soybeans will be around $10.14 per bushel, or about a nickel cheaper than last year. Nevertheless, the current soybean market suggests a slightly more favorable profit level than December corn futures (February average so far at $3.95), which matches up with USDA's baseline assumption that more soybean acres (90.1 million) could be harvested than corn acres (83.7 million) during the 2018 season. A lot could happen between now and then, however, and the soy complex appears to be headed sideways Tuesday morning, with lightly lower prices noted for soybean meal and old crop soybean futures. Watch for volatility in local basis bids on the barge market during this episode of flooding on the Illinois River, the Ohio River, and other Mississippi tributaries. But for now, basis bids remained mostly stable Monday as a nationwide average, at 69 cents under the March futures contract, with the DTN National Soybean Index at $9.65.

Wheat:

Nearly half of Kansas' winter wheat fields are considered by observers to be in 'poor' or 'very poor' condition already, and with persistent drought in the region, it's rational for the KC wheat futures to be leading the grain sector higher Tuesday morning with gains as large as 7 3/4 cents. Last week's baseline Agricultural Projections to 2027, from the USDA, may have also been a reminder to the wheat market that its profitability for farmers must be competitive with barley, oats, and other small grains during the coming planting season. Old crop Hard Red Winter wheat's cash bids averaged $4.37 Monday, or 41 cents under the March KC contract. The SRW Index was $4.33 or 27 cents under the March Chicago contract. Greater strength of demand is seen for Hard Red Spring wheat, with its cash index at $5.85 and average basis at 11 cents under the March Minneapolis contract.

Elaine Kub can be reachedatelaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

(KR)

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