DTN Early Word Grains

K.C. Wheat Leads Quiet Overnight Session

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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6:00 a.m. CME Globex:

May corn was 1/2 cent higher, May soybeans were 2 1/2 cents higher, and July Kansas City (HRW) wheat was 6 3/4 cents higher.

CME Globex Recap:

Most grains are higher early with K.C. wheat leading the way while the forecast continues to look dry for the southwestern U.S. Plains. Other commodities are starting the day mostly lower with overnight stock markets mixed and the March U.S. dollar index staying close to unchanged.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 399.28 points (1.6%) higher at 25,709.27, the NASDAQ Composite gained 84.07 points (1.1%) to 7,421.46, and the S&P 500 rallied 32.30 points (1.2%) to 2,779.60 Monday. DJIA futures were 58 points lower early Tuesday morning. Asian markets were mixed with Japan's Nikkei 225 up 236.23 points (1.1%), Hong Kong's Hang Seng down 229.94 points (-0.7%), and China's Shanghai Composite down 37.51 points (1.1%). European markets were also mixed with London's FTSE 100 up 2.06 points (0.03%), Germany's DAX down 18.19 points (-0.15%), and France's CAC 40 down 0.73 points (-0.01%). The euro was 0.0125 higher at 1.2340 while the U.S. dollar index lost 0.04 to 89.74. March 30-year T-Bonds were 7/32 lower at 144'00 while April gold gained $1.50 to $1,334.30. Crude oil was $0.31 lower at $63.60 and Brent crude slipped $0.26 to $67.24. China's Dalian soybean were steady to higher and Malaysian palm oil futures were barely higher overnight.

BULL BEAR
1) Corn prices keep pushing higher with ongoing support from Argentina's dry weather and in line with their seasonal trend. 1) Export demand for U.S. corn continues to run below a year ago and below the 4-year pace.
2) November soybeans closed at a new contract high Monday, helped by Argentina's dry weekend. 2) As with corn, export demand for U.S. soybean supplies is down 13% from a year ago, lower than expected.
3) A weaker U.S. dollar and continued concern over new-crop crop conditions are supporting winter wheat prices. 3) New-crop K.C. wheat futures spreads have shown no bullish urgency from the commercial side of the market.

The weekly Newsom on the Market column can be found on subscription sites only. On DTN Pro it is in News/Town Hall and on MyDTN in News/Columns.

MORE COMMODITY-SPECIFIC COMMENTS

CORN May corn is up a half-cent, staying near its highest prices in four months. This will sound familiar to frequent readers, but dry weather in Argentina continues to provide support to row crop prices at a time when not a lot else is happening. Once again, Tuesday's seven-day forecast expects more rain across central Brazil, but only light amounts for southern Brazil and Argentina. Corn's slow export pace continues to remain a bearish concern for corn prices, but the trend in May corn remains up while prices have not been enticing enough to pull supplies out of storage.

SOYBEANS May soybeans are up 2 1/2 cents early Tuesday, still challenging the old July high of $10.53 after blowing an attempt to post a new contract high on Monday. Fundamentally, soybean prices continue to be a tough call while the forecast remains dry for Argentina on one hand, and Brazil harvests a 4.1 billion bushel crop on the other hand. So far, Brazil's harvest has been close to its usual pace, but rain in the forecast for central Brazil remains a concern and seems likely to at least slow down the harvest pace. Technically, November soybeans did achieve a new contract high Monday and are accompanied by a small bullish inverse in the November/March spread. May soybeans do not look quite as bullish, but the trends remain up in both, May soybeans and soybean meal.

WHEAT July K.C. wheat is trading up 6 3/4 cents, helped by an early show of commercial buying and lack of rain in the seven-day forecast for the western U.S. Plains. Monday afternoon saw several states release new crop ratings for winter wheat that were close to last month's ratings. For Kansas however, the state NASS office said 49% of winter wheat was rated poor or very poor, up from 44% a month ago as drought worsened. Meanwhile, the Ohio River Valley continues to experience flooding problems with more rain on the way the next few days. Fundamentally, at some point traders are apt to remember that there is plenty of wheat around the world, but for now, the trend remains up in July K.C. wheat with noncommercials cautious about being short when drought is in play.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.39 $0.03 -$0.29 Mar $0.004
Soybeans: $9.65 -$0.01 -$0.69 Mar $0.009
SRW Wheat: $4.33 $0.08 -$0.27 Mar $0.006
HRW Wheat: $4.37 $0.09 -$0.41 Mar $0.003
HRS Wheat: $5.85 -$0.02 -$0.11 Mar $0.026

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

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Todd Hultman