DTN Closing Grain Comments

General Comments:

March corn settled up 2 3/4 cents per bushel, while July corn was up 2. January soybeans closed up 6, with July up 6 cents also. Chicago March wheat was up 1 1/4 cents, Kansas City March ended at down 1 1/4, and Minneapolis March wheat was 3 3/4 cents lower. The December U.S. dollar index is up .007 at 96.95. February gold is up $4.50 at $1244. March silver was up .101 at $14.60. The Dow Jones Industrial average is down 684 points at 25,142. January crude oil is up 33 cents per barrel at $53.31. January RBOB is 1.4488 - up .0174. January heating oil is up .0165 at $1.90.

Corn:

Despite what could be described as a meltdown in equities, it was an impressive day for corn. Following overnight weakness and a back-and-fill toward the Sunday night gap, March corn was able to close above both the 50-day and 100-day moving averages, with the post-G-20 gap still intact. Funds no doubt covered some shorts, driving some of the gains Tuesday. However, uncertainty still exists regarding China's plan to buy U.S. ag products, with confusion over the start of the 90-day truce period, with Larry Kudlow saying Jan. 1, and the White House saying Dec. 1. The hope with U.S. corn exporters and farmers is that China will eliminate tariffs and look to import some combination of corn, milo, ethanol, DDGs or pork from the U.S. So far, there has been no evidence to indicate that. U.S. corn is competitive in world markets, and if there were one bright spot in the ag markets, it is the shipment pace of U.S corn exports. The EIA energy report will be delayed until Thursday, with export sales now scheduled for Friday and the CFTC report on Monday, as services for President George H.W. Bush are set for Wednesday. DTN's National Corn Index settled at $3.45 on Monday and is priced 37 cents below the March contract.

Soybeans:

As in corn, an impressive performance Tuesday in both soybean oil and soybean futures. Following overnight weakness, in which the markets started lower and approached the breakout area of $8.95 to $9.00 on January beans, the market finished 6 higher and some 13 cents above the overnight low, leaving Sunday night's gap still unfilled. Soybean oil vaulted above both its 50-day and 100-day moving averages, while January beans remain convincingly above all major moving averages and well over the triangle downtrend line. Funds, who had been short soybeans and bean oil ahead of the G-20, appear to be having a change of heart. The market still needs confirmation of China's buying pledge, and some sort of token purchase would be nice to see. Some feel that some business is being done, and rumors of a 5 mmts (184 million bushels) eventual minimum purchase has been floating around. That would not be enough to change the ongoing bearish supply and demand outlook, but would sure help. There is so far no evidence, but Tuesday's market activity suggests traders are keeping hope alive. January 1 is the time frame when many expect China to emerge, as Brazil supplies are depleted ahead of new crop. Speaking of Brazil, they exported 5 mmt of soybeans in November, compared to 2.5 mmts last year, and January through November Brazil exports are said to be up 21% versus last year. DTN's National Soybean Index closed at $8.17 on Monday and is priced $0.85 below the January contract.

Wheat:

Wheat, perhaps the least affected U.S. ag product after the China truce, was not buying into the bullish euphoria Tuesday, with Chicago up a bit, but Minneapolis and Kansas City under pressure much of the day. Redeliveries of Kansas City receipts, and a new 60-contract delivery recorded in Duluth may have pressured those markets, as well as the ongoing trend of lower-than-expected export sales and shipments for U.S wheat. With several wheat tenders on the docket, there is a glimmer of hope in the next few days. Also possibly pressuring wheat is a much wetter outlook into mid-December for drought-plagued European wheat areas. The Russia-Ukraine conflict, of which there was little news Tuesday, will continue to underpin wheat. DTN's National HRW Index closed at $4.72 Monday, and that is an average basis of 33 under Kansas City March futures.

Dana Mantini can be reached at dana.mantini@dtn.com

Follow him on Twitter @mantini_r

(CZ)

Copyright 2018 DTN/The Progressive Farmer. All rights reserved.