DTN Before The Bell Grain Comments

Morning CME Globex Update:

Corn 3/4 lower. Soybeans 4 higher. Wheat 2 1/4 lower. Overnight gains that extended recent rallies may fall prey to outside market bearishness as the day wears on. The U.S. Dollar Index is trying to post a recovery and stay above 100.00, which on Tuesday may weigh down on soybean and grain futures prices. Recent speculative investment in the sector may be susceptible to a sell-off if no fresh upward momentum is achieved.

Other Markets:

Dow Jones:	Lower
U.S. Dollar Index:	Higher
Gold:	Lower
Crude Oil:	Higher

Corn:

Through a series of mostly small and steady gains, the March corn contract has risen 25 cents since Christmas. Early Tuesday trade, which included some lightly higher prices before pulling back, suggests this trend may continue, supported by strong demand and supportive energy futures markets, but without any fresh news yet to really spark any volatile movement. The December 2017 contract is within a nickel of $4.00, but it is still underpriced compared to November 2017 soybeans, and U.S. farmers are expected to favor the economics of planting soybeans when spring rolls around. Looking at nearby cash bids around the country, the DTN National Corn Index came to $3.34 again Monday, and the national average basis level remained steady at 36 cents under the March futures contract. At 8 a.m., USDA reported 125,000mt of corn sold to Unknown for delivery in 2016-2017.

Soybeans:

Soybean futures prices that traded as much as 10 cents higher overnight served a typical 'Turnaround Tuesday' function, keeping the nearby March futures contract within 15 cents of last week's $10.80 high, but certainly not extending the rally. Not yet. Flooding losses and some heat stress in Argentina, as well as some early harvest delays in Brazil, are already well-known by the market and fully priced in. Speculative traders have demonstrated their keen interest in the soybean rally, and total open interest in this market has risen 18 percent over the past two weeks, but some fresh bullish argument will be needed before the rally is likely to swing another leg higher. The DTN National Soybean Index fell to $9.81 Monday. The national average basis level weakened again to 77 cents under the March futures contract. At 8 a.m., USDA reported 112,000mt of soybeans sold to Mexico, 42,000mt for delivery in 2016-2017 and 70,000mt for delivery in 2017-2018. Also reported, 163,000mt of soybeans sold to Unknown destinations; 103,000mt for delivery in 2016-2017 and 60,000mt for delivery in 2017-2018.

Wheat:

Wheat futures were mixed overnight and into the early part of Tuesday's trading session. The spiky spring wheat futures rally appears to have peaked a week ago, but the nearby futures spreads are still inverted through the summer, suggesting that commercial wheat traders are still anticipating legitimate tightness in the physical demand and availability for that class of wheat. On the other hand, standard Soft Red Winter wheat, which is traded via benchmark Chicago futures, has a different scenario -- a burdensome expected stocks-to-use ratio of 71.5 percent. Still, it's not all bad news. Alongside the rallies for other feed ingredients like corn and soybean meal, the March Chicago wheat chart has risen 40 cents since Christmas. In the cash market, the SRW Index came to $3.94 Monday or 39 cents under the March Chicago contract; the HRW Index came to $3.51 or 94 cents under the March Kansas City contract; and the Spring Wheat Index came to $5.22, which showed an average basis bid of 42 cents under the March Minneapolis contract.

ElaineKubcan be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @ElaineKub

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