DTN Before The Bell Grain Comments

Commodities Split, Grains Lower

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

Morning CME Globex Update:

Tuesday morning's commodity board was split in two with grain contracts trading mostly lower and nearly every other commodity trading higher, supported by Tuesday's lower U.S. dollar. At 8 a.m. CST, USDA announced 4.4 million bushels (120,000 mt) of U.S. soybeans were sold to China for 2017-18.

Other Markets:

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

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Corn:

May corn was down a half-cent early Tuesday with less than a two-cent overnight trading range. Prices continue to hold near their highest level in seven months with support from another forecast that is mostly dry for Argentina. Late Monday, Agricultura Brazil reported 70% of soybeans have been harvested in Mato Grosso, Brazil's top soybean state, so it seems likely that planting of the second corn crop is probably going well also. Here in the U.S., winter storms are blowing across the central and northern Midwest while Kansas and Oklahoma encounter another windy day of dangerous wildfire conditions. Fundamentally, abundant U.S. corn supplies in storage remain a latent bearish risk while technically, May corn continues to inch higher and is now up over 30 cents from its January low. DTN's National Corn Index closed at $3.51 Monday, priced 37 cents below the May contract and at its highest price in seven months. There were 213 delivery intentions for March corn early Tuesday. In outside markets, the March U.S. dollar index is down 0.48 with concerns about the new tariffs on steel and aluminum on traders' minds, while the rest of the commodity board is mostly higher.

Soybeans:

At 8 a.m. CST, USDA announced 4.4 million bushels (120,000 mt) of U.S. soybeans were sold to China for 2017-18. May soybeans were down 4 1/4 cents earlier Tuesday, pausing after making another new contract high on Monday while Argentina's forecast remains mostly dry for this week. As mentioned above, Agricultura Brazil said Monday that 70% of soybeans have been harvested in Mato Grosso, close to the five-year average pace. Mato Grosso has had plenty of rain this year and if they aren't having problems, it bodes well for the rest of Brazil's harvest. Here in the U.S., we are still over a month away from planting soybeans and just over three weeks away from USDA's Prospective Plantings report, on Mar. 29. On Thursday, USDA will give us their latest supply and demand estimates and the numbers are apt to be mixed for soybeans with bears anticipating a lower U.S. export estimate and higher Brazil crop estimate, while bulls anticipate a lower crop estimate for Argentina. Fundamentally, the outlook for soybeans is difficult to call while technically, the trends in May soybeans and meal are clearly up. DTN's National Soybean Index closed at $9.98 Monday, at its highest price in over a year and priced 79 cents below the May contract. Early Tuesday, there were no delivery intentions for March contracts of soybeans, 135 for meal, and 125 for bean oil.

Wheat:

May Chicago wheat was down 7 3/4 cents and May K.C. wheat was down 8 1/2 cents early, giving back part of Monday's gains while the risk of wildfires remains high in the southwestern U.S. Plains. Tuesday's seven-day forecast expects only light precipitation for the region while moderate rain amounts are expected again for the southeastern Midwest where the SRW wheat grows and flooding has been a problem. The National Weather Service has high wind warnings and red flag warnings posted around Kansas and Oklahoma Tuesday after some fire outbreaks were reported late Monday in northern Texas, southern Kansas, and south-central Nebraska. Weather markets like the one winter wheat is currently in can be dangerously volatile, especially when traders know the world still has plenty of wheat available. For now, the forecast remains mostly dry and the trends in winter wheat contracts are up. DTN's National SRW index closed at $4.74 Monday, near its highest price in seven months and priced 36 cents below the May contract. Early Tuesday, there were 10 delivery intentions for K.C. wheat.

Todd Hultman can be reachedat todd.hultman@dtn.com

FollowTodd on Twitter @ToddHultman1

(KR)

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Todd Hultman