DTN Early Word Grains

HRW Wheat Feeling Lucky Friday

6:00 a.m. CME Globex:

March corn was fractionally lower, March soybeans were 4 cents lower, and July Kansas City wheat was 2 cents higher.

CME Globex Recap:

Grains were lower early Friday the 13th as soybeans took a breather from Thursday's strong post-report rally. Only Kansas City HRW wheat continued to trade higher, spurred on by USDA's larger than expected reduction in planted acres. Softs were mostly lower while energies and metals were red across the board. The U.S. dollar index continued to sink while DJIA futures rallied.

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OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 63.28 points (0.3%) lower at 19,891.00. The NASDAQ Composite lost 16.16 points (0.3%) to 5,547.49 and the S&P 500 was down 4.88 points (0.2%) at 2,270.44 Thursday. DJIA futures were 27 points higher early Friday morning. Asian markets were mostly lower though Japan's Nikkei was up 152.58 points (0.8%) and Hong Kong's Hang Seng gained 108.36 points (0.5%) while China's Shanghai Composite dropped 6.52 points (0.2%). European markets were higher Friday with London's FTSE 100 up 20.61 points (0.3%), Germany's DAX gaining 62.76 points (0.5%), and France's CAC 40 up 41.59 points (0.8%). The U.S. dollar index was 0.30 lower at 101.15 while the euro was up 0.0039 at 1.0650. March 30-year T-Bonds gained 9/32 at 152'28 while February gold fell $3.00 to $1,196.80. Crude oil lost $0.55 to $52.46 while Brent crude was $0.57 lower at $55.44. Dalian soybean and Malaysian palm oil futures were both higher overnight.

BULL BEAR
1) Domestic corn production and ending stocks for 2016-2017 were trimmed in USDA's January reports. 1) Dec 1 quarterly stocks of corn showed Q1 demand wasn't as strong as expected.
2) Projected domestic soybean ending stocks were decreased by 60 mb Thursday, what could be the first of many such reductions. 2) Brazil's soybean production estimate was increased to 104 mmt in the January WASDE report.
3) Winter wheat planted acres came in much lower than expected. 3) Domestic wheat ending stocks-to-use came in at 53.3%.

The weekly Newsom on the Market column can be found on subscription sites only. On DTN Pro it is in News/Town Hall and on MyDTN in News/Columns.

MORE COMMODITY-SPECIFIC COMMENTS

CORN USDA's January reports have come and gone and the story remains the same for corn. Both old-crop March and new-crop December remain locked in sideways trading ranges, with March hugging tight to the midpoint price of $3.57. The DTN National Corn Index (NCI.X, national average cash price) calculated at $3.23 1/4 Thursday evening, continues to sit at the low end of its upside target area between $3.23 and $3.29. With nothing overly bullish or bearish in the January set of numbers, corn traders will continue to watch export demand as the opportunity to take old-crop and cash corn higher. Friday's session could see the market stay under pressure, since it wanted to close lower Thursday but was pulled higher late by the rally in soybeans.

SOYBEANS Soybean contracts were lower early Friday morning, giving back a small part of Thursday's strong post-USDA report rally. Trends are up on both daily and weekly charts, though both old-crop March and new-crop November are already testing minor (short-term) resistance at $10.43 and $10.19 1/4 respectively. The key to the soybean market establishing staying power could be the reaction of basis if futures move higher. Also keep an eye on futures spreads, particularly old-crop, following USDA's lowering of domestic 2016-2017 ending stocks. Delivery of 104 contracts was reported against the January soybean contract, putting the total at 2,627 contracts. Another 93 contracts were reported delivered against Jan bean oil, putting its total to 5,194 contracts. Jan soybean meal reportedly had 203 contracts delivered, upping its total to 1,619 contracts.

WHEAT Winter wheat contracts were mixed early Friday with Chicago showing fractional losses while Kansas City continued Thursday's rally. The big news coming out of USDA's January reports was total planted winter wheat acres of 32.4 million, reportedly the lowest in over a century. Of course some of this supposed bullishness could be offset by projected 2016-2017 ending stocks of 1.186 billion bushels putting ending stocks-to-use at a whopping 53.3%. While initial buy orders may have been exhausted Thursday, light support could continue to come from the lower U.S. dollar index. Traders will also keep an eye on weather across the U.S. Southern Plains HRW growing area as an ice storm moves in. Generally, such storms in winter, as opposed to spring, are viewed favorably for the crop as the ice provides insulation for the dormant crop against the cold.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.23 $0.01 -$0.35 Mar $0.001
Soybeans: $9.68 $0.28 -$0.72 Mar -$0.007
SRW Wheat: $3.86 $0.07 -$0.40 Mar -$0.002
HRW Wheat: $3.50 $0.14 -$0.94 Mar $0.011
HRS Wheat: $5.34 $0.08 -$0.40 Mar -$0.042

Darin Newsom can be reached at darin.newsom@dtn.com

Darin can be followed throughout the day at www.twitter.com\DarinNewsom

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