DTN Early Word Grains
Commodities Leaning Higher Early Wednesday
May corn is up 1 1/4 cents, May soybeans are up 1/4 cent and May K.C. wheat is up 6 1/4 cents.
CME Globex Recap:After a technical error at CME Group overnight, markets are functioning again with European stocks and U.S. stock futures trading lower. The March U.S. dollar index is lightly lower and most commodities are starting the day higher.
OUTSIDE MARKETS:Previous closes on Tuesday showed the Dow Jones Industrial Average down 33.97 at 26,057.98 and the S&P 500 down 2.21 at 2,793.90, while the 10-yr Treasury yield ended at 2.64%. Early Wednesday, DJIA futures are down 63 points. Asian markets are higher with Japan's Nikkei 225 up 107.12 (0.5%) and China's Shanghai Composite up 12.31 points (0.4%). European markets are lower with London's FTSE 100 down 66.81 points (-0.9%), Germany's DAX down 86.35 points (-0.75%), and France's CAC 40 down 19.89 points (-0.4%). The March Euro is unchanged at $1.140 and the March U.S. dollar index is down 0.060 at 95.805. The June 30-Year T-Bond is down 1/32nds, while April gold is up $0.30 at $1,328.80 and April crude oil is up $0.70 at $56.20. Soybeans and meal on China's Dalian Exchange were both modestly lower.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
| BULL | BEAR | ||
| 1) | USDA's attache for Brazil lowered its soybean crop estimate from 117.0 million metric tons (mmt) to 115.5 mmt, a number that USDA may or may not use in the next WASDE report. | 1) | After a strong start, the pace of U.S. corn exports is starting to moderate. |
| 2) | The outlook for a trade agreement with China is not certain, but remains hopeful, in spite of this week's lower soybean price. | 2) | In spite of Friday's announced soybean sale to China, U.S. ending soybean stocks are still likely to hit a new record high in 2018-19. |
| 3) | As of February 12, commercials were net long in soybeans, Chicago wheat and Minneapolis wheat. | 3) | U.S. wheat exports remain disappointing with total commitments down 10% from last year's low pace. |
CORN May corn is up 1 1/4 cents early Wednesday, holding above support at the November low of $3.75 after two days of quick decline. Trading in futures contracts was interrupted by a technical problem at CME Group on Tuesday evening until quotes returned at 9:45 p.m. CST. U.S. stock futures have been a little lower overnight, but most commodities are higher, including April crude oil trading up 70 cents. A broad coverage of rain in this week's forecast for Brazil continues to weigh on corn prices as crops in both, Brazil and Argentina are doing well. Ethanol demand has also been a bearish concern for corn lately and the Department of Energy will provide an update on ethanol inventories at 9:30 a.m. CST. The trend in corn futures remains sideways.
SOYBEANS May soybeans are up 1/4 cent early Wednesday, still holding firmly sideways, while trade representatives from the U.S. and China work to bring about a trade agreement that can satisfy leaders of both sides. Media reports suggest the two sides are close, but nailing down final terms could still be a tough challenge. The market's dilemma is that even though a potential agreement that takes away China's 25% tariff on U.S. soybeans would be good for long-term U.S. demand, the U.S. is still facing a likelihood of record ending soybean stocks in 2018-19 and it will take a while to work off the surplus. Meanwhile, Argentina's soybean crops are doing well. Brazil is harvesting a smaller soybean crop in early 2019 and USDA is expecting Brazil to export 70 mmt (2.57 bb) of soybeans in the new season, down from 84.2 mmt in the season that just ended on January 31. The trend in soybean futures remains sideways.
WHEAT May K.C. wheat is up 6 1/4 cents early, finally getting a bounce after a steady string of new contract lows in February. The latest weakness in prices has reflected a disappointment among potential buyers that the U.S. did not get more export business after the world saw a 4% drop in production in 2018. Sensing a new downtrend, noncommercials have likely jumped on the short bandwagon, an event that will likely be confirmed when CFTC data gets brought up to date in a week and a half. Now at their lowest prices in over a year, May K.C. wheat futures are likely getting close to support and it will be interesting to see if and where commercials may turn net long. The early outlook for world wheat production in 2019-20 leans bearish, but there is the uncertainty of a whole new season ahead. The current trend in winter wheat is down.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.41 | -$0.04 | -$0.35 | May | $0.002 |
| Soybeans: | $8.20 | -$0.06 | -$0.97 | May | $0.015 |
| SRW Wheat: | $4.39 | -$0.05 | -$0.29 | May | -$0.001 |
| HRW Wheat: | $4.17 | -$0.07 | -$0.27 | May | -$0.008 |
| HRS Wheat: | $5.22 | $0.02 | -$0.33 | May | -$0.005 |
Todd Hultmancan be reached at todd.hultman@dtn.com
Toddcan be followed throughout the day on Twitter@ToddHultman1
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