DTN Closing Grain Comments

General Comments:

May corn closed down 2 1/4 cents per bushel and December corn was down 2 cents. May soybeans closed down 5 3/4 cents and November soybeans were down 5 cents. May K.C. wheat closed down 10 1/2 cents, May Chicago wheat was down 11 cents and May Minneapolis wheat was down 3 cents. The March U.S. dollar index is trading down 0.094 at 97.175. The Dow Jones Industrial Average is up 156.91 points at 25,607.15. April gold is down $7.50 at $1,291.80, May silver is down $0.06 at $15.29 and May copper is up $0.0110 at $2.9045. April crude oil is up $0.66 at $56.73, April heating oil is down $0.0086, April RBOB is up $0.0243 and April natural gas is down $0.074.

Corn:

May corn ended down 2 1/4 cents at $3.62 Monday, still pressured by favorable outlooks for corn crops in Brazil and Argentina -- two of the top three competitors to U.S. corn exports. Friday's WASDE report increased corn export estimates for Argentina from 29.0 mmt to 30.0 mmt (1.18 bb) and for Ukraine from 28.5 mmt to 29.0 mmt (1.14 bb), while keeping Brazil's estimate unchanged at 29.0 mmt. This week's forecast remains favorable for Brazil and Argentina with a broad coverage of rain expected over the main crop areas. Here in the U.S., planting season remains a concern with ample moisture saturating fields throughout the central U.S. and a large area still covered by snow in the northern states. Friday's CFTC data showed commercials slightly net long and noncommercials slightly net short, but managed funds were clearly net short with 192,847 contracts -- a big bearish bet. USDA's inspections came late Monday, but total corn inspections in 2018-19 are up 31% from a year ago, helped by last week's 30.1 million bushels (mb). With traders concerned about export competition ahead, the trend in cash corn is currently down early in 2019. There were 1,402 contracts of March corn still open early Monday, a few days before contracts expire on March 14. DTN's National Corn Index closed at $3.34 Friday, 30 cents below the May contract and at its lowest price in over three months. In outside markets, the March U.S. dollar index is down 0.09, while non-ag commodities are mixed.

Soybeans:

May soybeans dropped 5 3/4 cents to $8.90 Monday, a new three-month low in the futures contract while cash prices remain above support. Even though Friday's WASDE report slightly reduced USDA's estimate of U.S. ending soybean stocks for 2018-19, from 910 mb to 900 mb, it is still a record-high surplus, creating bearish concern for traders. Of course, we also have to mention that trade talks between the U.S. and China continue to make progress, but there is no definitive announcement yet and the uncertainty of that also weighs on prices. Earlier Monday, USDA said 34 million bushels (926,000 mt) of U.S. soybeans were sold to China for 2018-19, a modest amount that doesn't do much to help demand expectations yet. USDA also said last week's export inspections of soybeans totaled 32.1 mb, putting the 2018-19 total down 32% from a year ago and still well below USDA's estimated export pace. The one potentially bullish comment for soybeans is that Friday's CFTC data continues to show commercials net long in soybeans -- a vote of confidence for soybeans' value at these lower prices. Monday's lower close turned the trend in May soybean futures down, but the trend for cash soybeans remains sideways for now. Trading in March soybeans is getting thinner with 728 contracts still open as of early Monday. DTN's National Soybean Index closed at $8.06 Friday, 89 cents below the May contract.

Wheat:

May K.C. wheat fell 10 1/2 cents Monday to a new contract low of $4.20 1/4, extending winter wheat's selloff from February. According to USDA's World Market and Trade report from Friday, this is the first time in five years that monthly average price of U.S. HRW wheat is below the FOB price for Russia. Although bearish, it at least suggests prices are becoming so cheap that support may not be too far away. Adding to that view, Friday's CFTC data showed commercials net long 12,836 contracts, a light vote of confidence for K.C. wheat prices by the firms that know demand best. Noncommercials were net short 51,607 contracts as of March 5. Earlier Monday, USDA said 21.8 mb of wheat were inspected for export last week, putting the 2018-19 total down 6% from a year ago. Here in the U.S., the western Plains are expecting heavy precipitation this week, increasing chances for flooding. The situation could threaten winter wheat crops, but as we can see, traders showed no concern of that on Monday. With U.S. wheat supplies plentiful and the uncertainty of a new growing season ahead, the trends in cash HRW and SRW wheat are down, while the trend in cash HRS wheat remains sideways. DTN's National HRW Index closed at $4.11 Friday, 20 cents under the May contract and near its lowest prices in a year. DTN's National SRW Index closed at $4.15, near its lowest prices in 11 months. Trading in March contracts of wheat is dangerously thin with few contracts still open before contracts expire on March 14.

Todd Hultman can be reached at todd.hultman@dtn.com

Follow him on Twitter @ToddHultman

(CZ)

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