DTN Closing Grain Comments

New-Crop Soybeans, Meal Keep Rally Going

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN illustration by Nick Scalise)

General Comments:

Corn was down 1/2 cent in the March contract and down 3/4 cent in the December. Soybeans were up 5 3/4 cents in the March contract and up 8 1/4 cents in the November. Wheat closed down 2 1/2 cents in the March Chicago contract, up 1/4 cent in the March Kansas City, and up 7 cents in the March Minneapolis contract. The March U.S. dollar index is up 0.58 at 100.90. February gold is down $4.40 at $1,208.50 while March silver is up $0.03 and March copper is down $0.0105. The Dow Jones Industrial Average is down 35 at 19,792. March crude oil is down $1.48 at $51.78. March heating oil is down $0.0435 while March RBOB gasoline is down $0.0528 and March natural gas is down $0.114.

Corn:

March corn ended down a half-cent Wednesday in quiet trading, but stayed near the high end of its sideways, three-month range after excessive rains threatened Argentina's row-crop production over the weekend. Only lighter amounts are expected for Argentina and southern Brazil the next seven days, but flooding problems will be slow to recede (see "Argentina Flooding Poses Crop Loss" by DTN Senior Ag Meteorologist Bryce Anderson). The corn basis is slowly narrowing as typically happens this time of year, and cash corn prices have reached their highest level in six months. But prices may still be too low to generate much producer enthusiasm for selling. With corn prices 25 cents cheaper at the U.S. Gulf than at Brazil's ports, export business continues to favor the U.S. March corn continues to trade in a sideways range, near resistance at $3.69. DTN's National Corn Index closed at $3.30 Tuesday, priced 35 cents below the March contract and its highest price in six months. In outside markets, the March U.S. dollar index is trading up 0.58 after the U.S. Labor Department said consumer prices were up 2.1% in December from a year ago, as expected.

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Soybeans:

March soybeans closed up 5 3/4 cents Wednesday, continuing the upward surge that began on Jan. 12, USDA report day, and received an extra boost from unwelcome rains in Argentina over the weekend. Wednesday's action in particular saw increased interest for new-crop soybeans and meal as November soybeans closed up 8 1/4 cents and December meal was up $3.70. Bullish inverses in the new-crop spreads for soybeans and their products are all bullish reminders of how strong world demand is for U.S. soybeans -- even as the U.S. may be on the verge of a trade war with China. Brazil's soybean harvest typically shows up as increased exports in February, but may be a little delayed with rain in this week's forecast for central and northern crop areas, as well as the annual mention of truckers' strikes. March soybeans remain in an uptrend. DTN's National Soybean Index closed at $9.95 Tuesday, priced 75 cents below the March contract and at its highest price in six months.

Wheat:

March Chicago wheat closed down 2 1/2 cents, a modest retreat in quiet trading, but is still holding near its highest prices in 12 weeks. This week's forecast for the southwestern Plains is mostly dry again and may be one reason why cash HRW wheat prices are at their highest level in over six months, but most of the credit belongs to a long-overdue correction of demand for cash prices that reached their lowest level in 13 years in late-August. The noncommercial short-covering in Chicago wheat that has accompanied the rally the last three weeks has been an added bullish bonus. Currently, Chicago wheat is the least bullish of the three wheats, but remains in an uptrend with some extremely cheap prices in the rearview mirror. DTN's National SRW index closed at $3.93 Tuesday, priced 40 cents below the March contract and at its highest price in five months. DTN's National HRW index closed at $3.58 and at its highest price in six months.

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

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Todd Hultman