DTN Closing Grain Comments

Corn Steady; Soybeans, Wheat Falter on Slowing Economic News From China

Dana Mantini
By  Dana Mantini , Senior Market Analyst
(DTN illustration by Nick Scalise)

General Comments:

March corn settled up 1/4 cent per bushel, while December corn was up 3/4 of a cent per bushel. March soybeans closed down 6 3/4 cents, with Nov beans down 5 3/4 cents. Chicago March wheat settled down 5 1/4 cents, Kansas City March was down 5 1/2 cents, and Minneapolis March wheat finished down 4 1/2 cents per bushel. The U.S. dollar index is down .0740 at 95.59. February gold is down $2.40 at $1291.90. March silver was up .029 at 15.685. The Dow Jones average is currently down 75 points. February crude oil is down $1.01 cents at $50.58 per barrel. March RBOB is $1.382, down .0361. March heating oil is down .0278 at $1.8435.

Corn:

March corn finished little changed in two-sided, quiet trade on Monday. Pressured by poor China import and export data, which weighed on the soybeans and outside markets, corn was able to hold fairly steady on some bullish export inspections. Inspections at nearly 40 million bushels last week continue to run at a pace that is 61% higher than last year at this time. The recent fall in prices has also made U.S. corn more competitive in world markets. There continues to be hope that some Chinese purchases of U.S. corn or its by-products might soon be announced, but the trade is growing tired of trading on rumors only. Friday's CIF activity on Gulf barges bounced 5 to 6 cents, hinting that perhaps there was some business done at the end of last week. Until the government shutdown ends, we won't know. There is also talk of less of a switch of acres from soy to corn than had been talked about in weeks past, and December corn was a bit higher Monday. Weather in Brazil, though still hot and dry in key areas this week, has promises of more showers for central Brazil the following week. Soon, the prevailing pattern could affect the upcoming safrinha corn crop. DTN's National Corn Index closed at $3.46 on Friday and reflects an average basis of 32 under March.

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Soybeans:

Soybeans came under pressure from ideas of a slowing Chinese economy. Not only were Chinese soybean imports lower than expected at just 5.7 mmt (6 mmt to 6.5 mmt expected), but they were 40% below year ago levels. Also, the decline of 7.6% of all Chinese commodity imports for December compared to expectations for a 4% to 4.5% gain, and the decline of 4.4% on all China exports for December, promoted thoughts of a sharp decline in China's economy. While near-term Brazilian weather continues to be unfavorably hot and dry in Parana and Mato Grosso do Sul for the balance of the week, there is a hint of more normal weather beyond next week. However, crop losses are occurring now, and crop estimates are declining, with the latest being a 115.7 mmt prediction by Safras and Mercado. In the absence of any USDA reporting, the well-advertised 5 mmt purchase of soybeans by China so far is all the trade feels sure about. Soybean inspections showed up to 39.9 million bushels, but still remain some 40% below a year ago. The 5 mmt purchase is hardly enough to change the bearish fundamentals overhanging the soy market. DTN's National Soybean Index closed at $8.19 Friday and is $0.91 below the March futures contract.

Wheat:

Wheat gave back nearly all of Friday's gains on Monday, finishing down 5 1/4 to 5 1/2 cents in Chicago and Kansas City. Even though U.S. wheat has become one of the cheapest offers in the world, it has been Russia's aggressive selling and a freight advantage to Egypt that has prevented the U.S. from capitalizing. News that the Russian ag minister, following the large sale of 415,000 mt to Egypt, was limiting sales for the balance of the marketing year, should have been a positive input for U.S. wheat futures, but was not. Russia, for the second half of the year may only export 11 million metric tons, and that would be well below the 19 mmt last year, perhaps opening the door for more U.S. wheat business. Last week's export inspections at 20.1 million bushels, though more than double the previous week, is still not enough, with the total shipments of 495 million bushels still 11% below a year ago. U.S. Southern Plains wheat areas got a nice dose of moisture over the weekend, and the drought monitor so far this year, shows no problems in the U.S. DTN's National HRW Index closed at $4.79 on Friday, and that is an average basis of 25 under Kansas City March futures.

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

Follow Dana on Twitter @mantini_r

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Dana Mantini