DTN Before The Bell Grain Comments

Morning CME Globex Update:

The U.S. Dollar Index is pulling back Friday morning, allowing crude oil and the corn and soybean futures markets to adopt an upward direction, but wheat futures still linger in lower territory amid light trading volumes.

Other Markets:

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

Corn:

After several sessions of relatively low trading volume and subsequent volatile, streaky price movements, the corn market does have a chance to close the week with double-digit gains. Row-crop futures were slightly higher through the early part of Friday's trading session as the strong dollar fell back and released some bearish pressure. Profit-taking is likely in the stock market this Friday, and although there's lots of fresh investment capital looking for a home, grain commodities haven't been the recipient of that investment lately. Total open interest in corn, soybean, and wheat futures has actually dropped more than 10% over the past couple of weeks. Looking at corn's old-crop cash bids around the country, the DTN National Corn Index came to $3.38 Thursday, and the national average basis level remained steady at 42 cents under the May futures contract. Another 118 expiring March corn contracts were issued and stopped for delivery Thursday, but still no March ethanol futures contracts this month.

Soybeans:

The day-to-day direction of the soybean oil market continues to take its cue from the global oilseed markets, specifically the Malaysian palm oil futures market, which extended its recent bounce on Friday. To the extent that Chicago soybean futures follow along, too, that market is showing small gains at the start of Friday's trade. Prices will be vulnerable to wild movement if chart-based traders interpret Friday's close as an inflection point, then again next Thursday if fundamental traders find a surprise in the upcoming monthly World Agricultural Supply and Demand Estimates. The DTN National Soybean Index came to $9.57 Thursday, with the average basis bid strengthening again to 80 cents under the May futures contract. As winter melts away, a recovering rail backlog for U.S. soybean shipments may also help northern and western country basis bids recover. There were 568 expiring March soybean contracts issued and stopped for delivery Thursday, as well as 253 March soybean meal contracts and 489 March soybean oil contracts.

Wheat:

Winter wheat in several major growing areas across the Northern Hemisphere, including here in the U.S. and also in Europe and Russia, is exhibiting early progress after unusually warm, late-winter weather. This could be bullish to the futures markets if a threatening cold snap ever showed up on the forecast, but so far nothing has sparked such concern yet. Wheat contracts are a few cents lower Friday morning amid very light trade. Old-crop spring wheat basis strengthened Thursday, to 43 cents under the May Minneapolis contract. Meanwhile, basis bids are still weak for hard red winter wheat, but for the first time in a long time, on Thursday they averaged less than a dollar -- now 97 cents under the May Kansas City futures contract, or $3.73 cash. That still keeps the physical old-crop market at an atypical discount to the soft red winter wheat market. The SRW Index came to $4.05 Thursday, or 47 cents under the May Chicago contract. There were 518 expiring March Chicago wheat contracts issued and stopped for delivery Thursday, as well as three March KC wheat contracts, but again no March Minneapolis 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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