DTN Closing Grain Comments

General Comments:

March corn closed down 4 cents per bushel and December corn was down 3 1/4 cents. March soybeans closed down 13 cents and November soybeans were down 10 3/4 cents. March K.C. wheat closed down 12 1/2 cents, March Chicago wheat was down 15 1/4 cents and March Minneapolis wheat was down 5 1/2 cents.

The March U.S. dollar index is trading down 0.108 at 96.830. The Dow Jones Industrial Average is down 27.29 points at 25,515.98. April gold is up $0.20 at $1,315.30, March silver is down $0.08 at $15.57 and March copper is down $0.0015 at $2.7715. March crude oil is up $0.36 at $54.26, March heating oil is up $0.0277, March RBOB is up $0.0387 and March natural gas is down $0.001.

Corn:

Although U.S. corn export activity has been stout of late -- and rumors of China showing interest in U.S. corn offers sent the basis at export ports to strong gains -- it was the much lower than expected export sales from six weeks ago that sent markets reeling on Thursday. Although this is surely old news, these are markets that have been starving for confirmed, rather than rumored, export facts. Thursday's weakness comes despite some positive comments from both Treasury Secretary Mnuchin and President Donald Trump regarding the U.S./China trade progress. Also, an often cited Chinese consultancy, JCI, pegged China feed grain imports to surge in 2019 in their new supply and demand report. They pegged China corn imports to surge to 14.5 million metric tons (mmt). Do they know something that that the rest of the ag world does not? However, sales of corn of just 18.1 million bushels from January 3 was far below the 33.6 bushels per week needed to attain the USDA yearly export projection. Funds were thought to have sold an estimated 8,000 contracts as of midday. With Thursday's action, both March and December corn futures are once again challenging the uptrend line, with December falling below. March corn on Thursday is at the bottom of that tight $3.73 to $3.83 range that we have been in since the middle of December. Adding to bearish pressure is not only the expectation for a record large Argentine corn crop, but a bearish change in weather for the safrinha corn crop in Brazil, which this year figures to be 71% of the total crop. Rains are set to improve the moisture profile in many areas of Brazil into early March, if forecasts are correct. DTN's national corn Index closed at $3.51 on Wednesday, and reflects an average basis of 28 cents under March.

Soybeans:

Soybean futures were pummeled on Thursday, as a delayed export sales report from the week of January 3, reflected a net reduction of 612,000 mt (22.4 million bushels) and a marketing year low. The reduction included a net reduction for both China, of 29.6 million bushels, and "unknown" of another 16.3 million bushels, partially offset by gains in other importing countries. Even though it was old news, the total was roughly 44 million bushels below the weekly total needed to reach USDA's export projection. Total commitments as of January 3 were deemed to be down 27%, and total shipments, down 40% from last year. Funds reacted by selling an estimated 8,000 contracts of beans and 5,000 meal as of midday, adding to a net short soybean position. With China currently buying new crop Brazilian beans - 10 to 15 cargoes rumored on Wednesday -- the trade assumes that U.S. soybean purchases by China may be done. Also pressuring the soy complex on Thursday is the change in weather in Brazil to a wetter outlook, likely stabilizing that crop, or even benefitting late planted soybeans and the safrinha corn. The Rosario Grain Exchange also increased that soy crop by another 2 mmt to 52 mmt, but they remain well under the 55 mmt that WASDE estimated and other 55-56 mmt private estimates. Last year's Argentine bean production was a drought-ravaged 37.8 mmt. March soybeans are sitting right on the uptrend line, while new crop November is just 4 to 5 cents above the trend. This is a market, with its overwhelmingly bearish supply, that needs some good news from Beijing soon. DTN's National Soybean Index closed at $8.30 on Wednesday and is priced 88 cents below the March futures contract.

Wheat:

The wheat market, led by Chicago, plunged on Thursday to new contract lows in Kansas City spot and new crop July futures and Chicago July wheat. The unusual quadruple bottom on Chicago July at $5.17 was breached quickly, with a slew of sell orders likely resting below. There was said to be a major sell order touched off in Chicago March wheat once $5.11 was breached. Funds, as of noon Thursday, were estimated to have sold as much as 11,000 contracts, and likely more by the close. The weakness is being led by the nearby months, perhaps a sign that we are missing out on the multiple wheat tenders this week. The U.S. dollar index nearly matched the highest level in months -- another bearish input for the wheat market. The delayed export sales report from the week of January 3 was also a marketing year low for wheat, and sales and shipments as of that date remained 8% and 11% lower than last year. Minneapolis fell, but not as hard, as a strong basis, a tightening nearby spread, and weather and logistical issues have supported that market. Minneapolis wheat remains the only wheat market trading above key moving averages. On a rally back spot wheat resistance is likely to be $4.90 to $4.95 in Kansas City, and $5.13 to $5.15 in Chicago March. DTN's National HRW index closed at $4.74 on Wednesday, and that is an average basis of 20 cents under Kansas City March futures.

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

Follow him on Twitter @mantini_r

(CZ)

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