DTN Closing Grain Comments

Winter Wheat Prices Fall; Region Remains at Risk

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN illustration by Nick Scalise)

General Comments:

Corn was down 3 3/4 cents in the May contract and down 3 1/4 cents in the December. Soybeans were down 3 1/2 cents in the May contract and down 3 1/4 cents in the November. Wheat closed down 9 1/2 cents in the May Chicago contract, down 6 1/2 cents in the May Kansas City and down 5 cents in the May Minneapolis contract.

The March U.S. dollar index is up 0.30 at 102.10. April gold is down $8.10 at $1,208.00 while May silver is down 26 cents and May copper is down $0.0235. The Dow Jones Industrial Average is down 28 at 20,896. April crude oil is down $2.78 at $50.36. April heating oil is down $0.0525 while April RBOB gasoline is down $0.0272 and April natural gas is up $0.097.

Corn:

May corn closed down 3 3/4 cents Wednesday, pressured again by a beneficial forecast for this week's crop development in South America. Thursday's WASDE report is not expected to show much change in USDA's estimate of U.S. ending corn stocks for 2016-17, but traders are expecting to see a higher crop estimate for Brazil as planting season for the second crop is going well, so far. The demand side of the market continues to be supportive for corn prices and the U.S. Energy Information Administration said Wednesday that ethanol production slipped from 1.034 million barrels to 1.022 million barrels a day last week. Inventory also eased from 23.1 million barrels to 22.9 million barrels as warmer weather gave inventories the first dip since Christmas and possibly an early boost in this year's driving season. Brazil's next corn crop remains a bearish concern for prices, and while May corn remains in an uptrend, prices appear to be losing upward momentum. There were 49 deliveries of March corn early Wednesday. DTN's National Corn Index closed at $3.35 Tuesday, priced 41 cents below the May contract and near its highest price in eight months. Grains encountered resistance from Wednesday's higher March U.S. dollar index, trading up 0.30 with the Federal Reserve's next rate decision due on March 15. April crude oil is down $2.78 after the Energy Department reported another week of record U.S. oil inventory, now at 528.4 million barrels.

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Soybeans:

May soybeans closed down 3 1/2 cents Wednesday, coming to rest near February's low just one day ahead of USDA's WASDE report. It is no secret by now that Brazil's next soybean crop will probably be a new record and Dow Jones' survey expects USDA to raise its crop estimate from 104.0 to 106.1 on Thursday -- a number that is still 2 mmt to 3 mmt lower than other private estimates. With Brazil's harvest half over by now and this week's forecast giving a green light for more harvest progress, there appears to be no major hurdles standing in the way of more supplies coming to market. In spite of the bearish situation, soybean prices have been reluctant to make new lows, because demand has also done well early in 2017. Early Wednesday, Dow Jones reported China's soybean imports totaled 13.2 mmt in the first two months of 2017, up 30% from a year ago. USDA also said 122,000 metric tons of U.S. soybean meal were sold to Philippines for 2016-17. May soybeans have slowly been losing their tug of war since mid-January, but so far, prices are still holding above the 2017 low of $10.01. DTN's National Soybean Index closed at $9.45 Tuesday, priced 80 cents below the May contract and also within a sideways range. Among March contracts, there were 238 soybeans, 234 meal, and 816 bean oil delivered early Wednesday.

Wheat:

May Chicago wheat closed down 9 1/2 cents, pressured by commercial selling after an emotional day of wildfires and tragedy in the southwestern Plains. Conditions still remain dangerously dry with no rain expected the next couple days, but winds are somewhat calmer in the region with Wednesday's stronger gusts found around the Great Lakes. Eastern Oklahoma has chances for rain Friday into the weekend, but the western side of the region is expected to remain dry and at risk. Thursday's WASDE report may show a boost in Australia's wheat crop estimate but will mainly serve as another bearish reminder of how much wheat is available around the world. On Wednesday, USDA's attache started new-crop season guesses with a 6% higher crop estimate for India, at 95.0 mmt. May Chicago wheat remains in an uptrend, but is showing signs of flattening out until more is known about this year's winter wheat crops. DTN's National SRW index closed at $4.11 Tuesday, priced 45 cents below the May contract and near its highest price in eight months. DTN's National HRW index closed at $3.77 and was near its highest price in eight months. Among March contracts, there were 229 deliveries of Chicago, 134 deliveries of Kansas City wheat, and 289 deliveries of Minneapolis wheat early Wednesday.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman