DTN Closing Grain Comments

General Comments:

Corn was down 5 1/4 cents in the March contract and down 3 3/4 cents in the December. Soybeans were down 17 1/2 cents in the March contract and down 10 1/4 cents in the November. Wheat closed down 7 cents in the March Chicago contract, down 11 1/4 cents in the March Kansas City, and down 17 3/4 cents in the March Minneapolis contract.

The March U.S. dollar index is down 0.60 at 100.56. April gold is up $7.90 at $1,241.00 while March silver is up 11 cents and March copper is down $0.0265. The Dow Jones Industrial Average is down 22 at 20,590. March crude oil is up $0.23 at $53.35. March heating oil is down $0.0017 while March RBOB gasoline is down $0.0214 and March natural gas is down $0.061.

Corn:

March corn closed down 5 1/4 cents, falling back from its first test of $3.80 since July. This is an interesting time for corn prices as Brazil and Argentina are supposed to be looking forward to a 28% total rebound in corn production this spring and yet, we see Brazil's FOB corn price near its highest level in three months and U.S. corn prices trending steadily higher. I do not doubt Brazil's favorable weather reports and the crop estimates may not be far off, but it appears that demand for corn is doing better than expected early in 2017. Along that line, USDA said last week's export sales and shipments of corn totaled 30.8 and 49.3 million bushels respectively, a bullish showing that has total exports up 67% in 2016-17 from a year ago. We have also seen ethanol production near record levels and DTN Livestock Analyst John Harrington reminds us that 2017 is expected to be a year of livestock expansion, including a 5% boost in USDA's estimate of pork production. Put it all together and March corn's current up-trend should have farther to go. DTN's National Corn Index closed at $3.42 Wednesday, priced 37 cents below the March contract and at its highest price in seven months. In outside markets, it seems odd on a day when grains were lower, but the March U.S. dollar index is down 0.60 with doubts about a rate hike in March.

Soybeans:

March soybeans closed down 17 1/2 cents Thursday, quickly erasing Wednesday's gain. Like corn, soybean prices are doing much better than expected early in 2017 and we can't cite any significant weather problem down south as the culprit. Yes, Argentina has had flooding problems which may not be over yet, but 55.5 mmt is still decent production in a year when Brazil is on track for a record high 104.0 mmt or more. As with corn, the answer for soybeans is more likely found on the demand side of the ledger where the numbers are written in invisible ink until USDA's quarterly grain stocks reports help out. Thursday's weekly export clue from USDA showed 32.7 million bushels of soybean sales and 41.8 million bushels shipped, a bullish combination that has total shipments up 18% in 2016-17 from a year ago, just as Brazil's exports should start to pick up. March soybeans continue to trade within a wide range, but so far, the trend is pointed higher. DTN's National Soybean Index closed at $9.87 Wednesday, priced 75 cents below the March contract and near its highest price in six months.

Wheat:

March Chicago wheat closed down 7 cents Thursday, leaving a daily reversal as early commercial buying turned into selling around noon CST. It is still true that February's warm temperatures are likely to entice crops out of dormancy the next several days while it is much too early to forget about the risks of winter. On Thursday, the Climate Prediction Center predicted normal temperatures in March for winter wheat areas north of Oklahoma and Arkansas, warmer-than-normal temperatures south. The weather concern is minor so far and we can't forget that U.S. and world wheat supplies remain plentiful. Thursday's reversal may be a warning sign for bulls, but so far, March Chicago wheat remains in an up-trend until proven otherwise. DTN's National SRW index closed at $4.18 Wednesday, priced 37 cents below the March contract and at its highest price in seven months. DTN's National HRW index closed at $3.78 and at its highest price in seven months.

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

Follow Todd Hultman on Twitter @ToddHultman1

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