DTN Closing Grain Comments

General Comments:

March corn settled up 6 cents per bushel, while December corn was up 4 cents. March soybeans closed up 13 1/4 cents, with new crop Nov beans up 10 3/4 cents. Chicago March wheat settled up 5 1/4 cents, Kansas City March was up 8 1/2 cents and Minneapolis March wheat, finished up 7 cents per bushel. The U.S. dollar index is up .058 at 95.735. February gold is down $1.50 at $1292.30. March silver was down .098 at $15.54. The Dow Jones average is currently down 3 points at 24,204. February crude oil is down 27 cents at $52.04 per barrel. March RBOB is at $1.4408, up $0.0082. March heating oil is down $0.0117 at $1.8768.

Corn:

Following an uneventful and slow start to the day session, March corn is in unison with spot wheat and bean futures rallied sharply beginning midday. U.S. wheat and corn have been one of the world's bargains on a FOB basis, and news that South Korea had come in and allegedly bought a total of 400,000 metric tons (mt) (15.7 million bushels) of corn the past few days, along with various rumors of China buying U.S. wheat (unconfirmed) sent an otherwise weak market higher. U.S. corn continues to be attractive to world importers, said to be at even money or better to Argentine corn into Asian destinations. The CIF barge basis (up 4 to 5 cents Thursday) and the narrowing of futures spreads would indicate cash demand, fund buying or both. Also, likely just starting to impact corn as the safrinha corn planting begins in Brazil, is the drying soil moisture profile and high heat in key Brazilian corn areas. Aside from a brief period of showers into Monday and Tuesday, Brazil is expected to once again heat up and dry out. The ongoing hot and dry pattern has impacted the first corn crop, but to a lesser degree. It will be interesting to see if the rally can continue, with all of the March key moving averages converging between $3.78 and $3.79 and Thursday's March close just above that at $3.80. DTN's national corn Index closed at $3.42 on Wednesday and reflects an average basis of 32 cents under March.

Soybeans:

With wheat leading the way at midday, the soybean market rallied sharply and finished higher, though off the daily highs. Unlike wheat and corn, soybeans may be along for the ride, as there has been no indication in cash markets of substantial new soy export business. With Brazilian soybean FOB offers having fallen another 6 cents on Wednesday as their early harvest expands, both U.S. ports (Gulf and PNW) are searching for bids. Bearish for soybeans has been the falling Brazilian and U.S. offers, along with the expansion in African swine fever and its demand-dampening impact in China and of course the ongoing trade issues with China. Bullish for beans is the constant slippage in yield potential in the center south and northeast areas of the Brazilian soy belt. Following some much-needed showers this weekend and early week, which many feel will not exceed the soil evaporation, a return to the hot and dry pattern next week and into the end of January will continue to underpin this market. Recent Brazilian crop estimates have fallen to 116 to 118 million metric tons (mmt) compared to 122 to 125 mmt or higher a month ago. Unlike corn, which briefly penetrated trend line support, soybeans have been able to stay above that trend, which began in mid-September. Going forward, it is South American weather, China/U.S. trade talks, and the opening of the government, which is likely to drive price. DTN's National Soybean Index closed at $8.03 on Wednesday and is priced $0.91 below the March futures contract.

Wheat:

Wheat futures, and specifically Kansas City wheat led the midday rally, as Kansas City all of a sudden went 12 to 13 cents higher very quickly. After that the rumors began that China may have finally bought some U.S. wheat. It is still a rumor. U.S. wheat has been the cheapest FOB offer from major exporters and it would not be surprising to see that we have made some new sales Thursday, even if not China. The fact that Black Sea wheat offers are said to have risen another $3/mt (8 cents per bushel) to near seasonal highs, makes U.S. more attractive. In the past week there were several wheat tenders, and it is possible that Thursday's strength was exporters covering part of recent sales as wheat began the day within 10 cents of contract low. Although forecasts of extreme cold have moderated for the U.S. Midwest, there is still that chance for some winterkill potential over the weekend. DTN's National HRW index closed at $4.71 on Wednesday, 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 Mantini on Twitter @Mantini_R

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