DTN Before The Bell Grain Comments

Grains Sneak Higher, South Korea Cancels Corn

Todd Hultman , DTN Grains Analyst
(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

March corn was up 1 1/2 cents, March soybeans were up 3 3/4 cents, and May Chicago wheat was up 3 3/4 cents. At 8 a.m. CST, USDA announced 5.4 million bushels (136,000 mt) of optional origin corn was cancelled by South Korea for 2016-17. Earlier Wednesday, grains were higher with little fanfare while other commodities were quietly mixed and the U.S. dollar index was modestly higher. Brazil's forecast remains favorable for further soybean harvest progress.

Other Markets:

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

Corn:

At 8 a.m. CST, USDA announced 5.4 million bushels (136,000 mt) ofoptional origincorn wascancelled bySouth Korea for the 2016-17 marketing year. Before the announcement, March corn was up 1 1/2 cents with a narrow overnight range, sticking to the same pattern that we have seen since harvest. Corn prices continue to benefit from increasing livestock numbers, record ethanol production, and this year's higher pace of exports while U.S. corn holds a significant price advantage over South America. South America's next harvest is on track for a 28% increase from a year ago and will be a competitive threat when it arrives, but those exports are still a few months off. In the meantime, March corn continues to trend gradually higher. DTN's National Corn Index closed at $3.33 Monday, priced 37 cents below the March contract and down from its highest price in seven months. In outside markets, the March U.S. dollar index is up 0.24 and holding roughly sideways while traders wait to see if there will be a rate hike in March.

Soybeans:

March soybeans were up 3 3/4 cents with help from early commercial buying in soybeans and a modest early rebound in soybean oil. The outlook for soybeans remains a mixed bag in 2017 and, so far, soybean prices are not giving away any strong clues. By all reports, Brazil's harvest is going well and they are on track for a record crop of at least 104.0 mmt (3.8 bill bu). DTN's seven-day forecast expects light to moderate rain in Mato Grosso and is mostly dry for the rest of the country, favorable for further harvest. But the world needs a lot more than 3.8 billion bushels and so we see March soybean prices holding roughly steady, above support at $10.17 with a bearish forecast likely coming out of USDA's annual outlook forum at the end of this week. DTN's National Soybean Index closed at $9.53 Monday, priced 73 cents below the March contract and down from its highest price in six months.

Wheat:

May Chicago wheat was up 3 3/4 cents early Wednesday, finding support at the site of its previous breakout, made just two weeks ago. DTN's seven-day forecast has precipitation expected in the eastern Midwest, but the southwestern Plains will be drier again with pockets of concern around Kansas and Missouri. Outside of the U.S., there are no major concerns at this time, but of course, it is still February. Wheat prices have had a decent correction from their 2016 lows and significant short-covering has taken place among noncommercials, but it is difficult to see what might support the uptrend from here. Until we know more about the next growing season, wheat prices are likely to chop sideways. DTN's National SRW index closed at $4.01 Monday, priced 35 cents below the March contract and down from its highest price in seven months.

Todd Hultmancan be reached at todd.hultman@dtn.com

FollowTodd on Twitter@ToddHultman1

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