DTN Before The Bell Grain Comments

Grains, Oilseeds Adopt Lower Tone

Elaine Kub
By  Elaine Kub , Contributing Analyst
(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

Corn 1 1/4 lower. Soybeans 3 lower. Wheat 2 1/2 lower. Investors' attention is being taken up by interest rate speculation and the surging stock market. Corn, soybean, and wheat prices explored both higher and lower territory overnight, maintaining the upward trend on the corn and wheat charts, but without any fresh burst of buying activity, commodity futures prices could sag through the Wednesday session.

Other Markets:

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

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Corn:

The March corn futures chart has slowly churned an average of 2 1/2 cents higher every week since December 1st, and although prices are lightly lower at the start of Wednesday's trade, that upward trend remains in place. The new crop December 2017 corn contract has hit the $4.00 mark for two days in a row, and it could easily re-test that level again Wednesday. The optimism about corn consumers' demand and willingness to pay -- from ethanol producers to livestock feeders to grocery shoppers buying HFCS -- is consistent with the economic optimism demonstrated by the stock market this week. The S&P 500 Index surged to another record high Tuesday (2,337 points), and overnight futures suggest the rally may continue. Meanwhile, looking at old crop cash bids around the country, the DTN National Corn Index came to $3.37 Tuesday, and the national average basis level remained steady at 37 cents under the March futures contract.

Soybeans:

Malaysian palm oil futures hit another fresh four-year high last week and are still lingering near that level, equivalent to 34 U.S. cents per pound. This strength in global oilseed prices supports nearby soybean oil futures, also trading around 34 cents per pound, and the entire soy complex generally. In the day-to-day ebb and flow of futures trade, however, Wednesday has started off as an 'ebb' day, with soybean prices down 3 cents. Daily trading volumes have been moderate during this season of South American weather watching, but presently, the South American weather forecast isn't bringing any frantic stories to the market. The DTN National Soybean Index dipped to $9.71 Tuesday, with average U.S. basis strengthening to 74 cents under the March futures contract.

Wheat:

A short-term upward trend in the U.S. Dollar Index has continued after comments made by Fed chair Janet Yellen maintained the case for further interest rate rises, yet the wheat market has so far been resistant to this traditionally bearish influence. Minneapolis spring wheat futures continue to chart their own path, with some light gains overnight while the rest of the sector was drooping. Spring wheat futures spreads are no longer exhibiting wild day-to-day movements and are no longer inverted, but with only 3.25 cents between the May and July contracts, it's clear that commercial traders' outlook still sees tight supply and demand for this variety. Wheat basis bids remained mostly steady Tuesday, with the SRW Index at $4.13 or 37 cents under the March Chicago contract; and the HRW Index at $3.74 or 91 cents under the March Kansas City contract; and the Spring Wheat Index at $5.28 or 40 cents under the May Minneapolis futures contract.

Elaine Kubcan be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter@elainekub

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Elaine Kub