DTN Closing Grain Comments

General Comments:

March corn settled down 7 1/4 cents per bushel, emphatically breaking through the trend line, while December corn was down 5 3/4 cents, closing just above it. March soybeans closed down 10 1/4 cents and is just above trend support, with new-crop Nov beans down 9 cents. Chicago March wheat settled down 3 1/4 cents, Kansas City March was down 3 1/2 cents, and Minneapolis March wheat, finished down 4 cents per bushel. The U.S. dollar index is up .5750 at 96.16. February gold is down $1.70 at $1289.60. March silver was down .051 cents at $15.635. The Dow Jones average is currently up 67 points. February crude oil is up $1.70 cents at $52.22 per barrel. March RBOB is 1.4319 - up .0495. March heating oil is up .027 at $1.8668.

Corn:

Corn plunged on Tuesday, fueled early by poor economic news out of China, and losses accelerated on the falling soybean market and alleged comments by U.S. Trade Representative Robert Lighthizer that little progress has been made with China on trade talks. Although progress has been good on China's proposed ag product purchases, apparently agreement on intellectual property and other issues has failed so far. The next meeting is not until Jan. 30. In the meantime, U.S. corn is enjoying a price advantage to world corn importers and, although we have seen no confirmation of new business due to the shutdown, the U.S. is well positioned to garner new corn business. Competition does remain formidable still, with Ukraine corn exports, at 28 mmt and up some 10 mmt from last year. Safrinha planting has begun in parts of Brazil, and at some point, the hot and dry weather, and declining soil moisture could affect corn. Funds are likely liquidating corn futures Tuesday, as corn remains the only primary ag product that funds have been net long. March corn broke below the trend line, which should lead to more weakness, while December corn is just a penny above the trend. DTN's National Corn Index closed at 3.46 on Monday, and reflects an average basis of 33 under March.

Soybeans:

Soybean futures were pummeled Tuesday, as a combination of poor Chinese economic news, falling Brazilian offers, and some bearish trade comments sent the market reeling. The lack of concrete evidence of additional China soybean demand is also weighing on a market that remains overall in a very bearish supply-and-demand environment. The trade is convinced China has purchased at least 5 mmt (180 million bushels), but that is hardly enough to change the bearish outlook, with the largest U.S. ending stocks in history. Even with a Brazilian crop that may be some 4 mmt below last year, the combined South American soy crop could be 15 million metric tons above a year ago. The good news for soybeans is a December NOPA crush of 171.8 million bushels, which is 2 million above estimates, and the largest December crush on record. Soy oil stocks were much lower than expected, and likely attributed to good biodiesel margins. The African swine fever continues to spread in China with 100 cases reported, leading to the culling of nearly 1 million pigs. Granted, that is a very small portion of the total herd, but the demand-dampening impact has hurt a market searching for bullish demand news. So far, there is no indication China has or will remove the 25% tariff on U.S. soybeans. March soybeans are a few cents away from falling under the trend line. DTN's National Soybean Index closed at $8.12 on Monday and is $0.91 below the March futures contract.

Wheat:

Wheat is along for the bearish ride Tuesday, falling in sympathy with corn and soybeans, and on the continued lack of any confirmation of alleged China purchases of U.S. wheat and corn. The trade has become weary of the rumor mill, which had driven earlier gains. The good news is that with Tuesday's 5 to 6 cent break in wheat, U.S. wheat offers will become even more competitive. Currently, U.S. wheat, on a FOB basis, is said to be a $12 to $13 per metric ton (33 to 35 cents per bushel) cheaper than both EU and Russian wheat. Business should be shifting in the direction of the U.S. on wheat! I would not be surprised to see Egypt's GASC tender tonight following the weak close. Winter wheat has received some beneficial moisture of late, with no drought issues in the U.S., but a brutal cold spell early next week will be closely watched. The U.S. Midwest is expected to see much below normal temps into mid-February. DTN's National HRW Index closed at $4.75 on Monday, an average basis of 24 under Kansas City March futures.

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

Follow Dana on Twitter @mantini_r

(CZ)

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