DTN Before The Bell Grain Comments

Morning CME Globex Update:

The S&P 500 may have jumped the shark Wednesday, posting a gap higher on the chart and reaching a fresh record as high as 2,400 points. Navigating that market may occupy most speculative investors' attention Thursday, and commodities could slump amid uncertainty and low trading volume.

Other Markets:

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

Corn:

After doing the hard work of kicking upward, back to within a dime of its February high, the corn market now seems content to coast along during Thursday's session. Trading volumes have been especially light since the calendar switched over to March, which may help to explain the market's recent ability to streak higher without opposition. Weekly export sales were again favorable for corn, at 28.1 million bushels. Most of the open interest has moved to the May futures contract. New-crop December futures traded above $4.00 overnight. Now that all the trading sessions of February are complete, the average February closing price for that December contract turned out to be $3.96, which will serve as a reference price for 2017 crop insurance products. Looking at old-crop cash bids around the country, the DTN National Corn Index came to $3.40 Wednesday, and the national average basis level strengthened to 42 cents under the May futures contract. There were 118 deliveries issued and stopped in the expiring March corn contracts Wednesday.

Soybeans:

A lower trend has formed on the May soybean chart after the market has formed highs three times in the past three months, but each peak has been gradually lower than the previous one. If Monday's $10.56 1/4 turns out to be the highest price level the market can muster this month, the trend would generally fit in with the fundamental story of a record-breaking Brazilian soybean harvest seasonally pressuring the market. For U.S. farmers contemplating acreage decisions, the average February close of the new-crop November soybean futures contract came to $10.19, a reference level at which most farmers should be able to pencil in a profit in 2017. Old-crop prices are less appealing -- the DTN National Soybean Index came to $9.70 Wednesday, with the average basis bid strengthening back to 82 cents under the May futures contract. There are still some hugely wide basis bids in the northern and western U.S., where soybeans headed toward the PNW are still pressured by rail backlogs. There were 561 expiring March soybean contracts issued and stopped for delivery Wednesday, as well as 253 March soybean meal contracts and 594 March soybean oil contracts.

Wheat:

Wheat futures are mixed Thursday morning amid light trading volume and dispersed pockets of open interest. As the day wears on, the most natural direction for the market to adopt would be lower, alongside the corn and soybean markets. The U.S. Dollar Index is pushing higher again Thursday morning, a factor that is typically bearish to grains. There is widespread anticipation of an interest rate hike this month, especially given the overheated gains in the stock market. Old-crop spring wheat basis suddenly weakened Wednesday, to 44 cents under the May Minneapolis contract. Meanwhile, weakness in the basis bids for Hard Red Winter wheat (now an average of $1.00 under the May KC futures contract, or $3.78 cash) keeps the physical old crop market at an atypical discount to the Soft Red Winter wheat market. The SRW Index came to $4.10 Wednesday, or 47 cents under the May Chicago contract. There were 790 expiring March Chicago wheat contracts issued and stopped for delivery Wednesday, as well as six March Kansas City wheat contracts.

Elaine Kub is the author of "Mastering the Grain Markets: How Profits Are Really Made" and can be reached at elaine@masteringthegrainmarkets.com.

Follow Elaine Kub on Twitter @elainekub

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