DTN Before The Bell Grain Comments

Grains Gain Beside Widespread Commodity Activity

Elaine Kub
By  Elaine Kub , Contributing Analyst
(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

Soybeans saw some double-digit-higher trade overnight and are still leading the grain and oilseed complex higher Thursday morning, the last day of trade this week. Nearly all other commodities are also posting gains.

Other Markets:

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

Corn:

The markets will be closed for Good Friday this week, making Thursday's session the last opportunity for the front-month corn chart to extend its upward trend on the weekly chart by trading above last week's high of $3.71 3/4. Crude oil prices have been on an upward streak since late March and now trade above $53 per barrel after the market learned that U.S. inventories have started to decline, lending bullishness to the entire commodity sector Thursday morning. Corn's export sales progress was only 738,000 metric tons this week. The DTN National Corn Index, an average of cash bids around the country, came to $3.33 Wednesday, with the national average basis level steady at 36 cents under the May futures contract. The average cash bid for new-crop corn is $3.49 or 43 cents under the December contract, making the new-crop soybean-to-corn price ratio look quite normal at 2.5-to-1, and no longer favoring soybean acres as aggressively as was seen in early March.

Soybeans:

Soybeans have followed Wednesday's 8-cent gains with continued upward trade on Thursday morning. Commodity speculators have built up their largest net-short position in ag commodities in over a year, so prices will be vulnerable to sudden bursts of short-covering, especially in the soy complex. A large part of traders' previously bearish mood was based on the prospect of large harvests in Brazil (which was pegged at 111 million metric tons in USDA's latest projections) and Argentina, but significant portions of the Argentinean harvest face serious threats from recent flooding. Although the skies are forecast to be clear in eastern Argentina through the Easter weekend, many fields are completely inaccessible due to washed-out roads, and harvest is essentially at a standstill with an unknown ultimate effect on global supply. Meanwhile, U.S. export sales came to 402,300 metric tons of soybeans -- a smaller performance than what has typically been seen in recent weeks. The average new-crop soybean bid collected by DTN Thursday was $8.84 and the spot DTN National Soybean Index was $8.74, with average soybean basis remaining steady at 74 cents under the May futures contract.

Wheat:

Weekly wheat export sales of 421,600 mt won't surprise the market, and futures prices are likely to hold their small gains alongside the higher prices in most commodity markets Thursday morning. Spring wheat futures have been notably volatile this week, and if the nearby contracts can close Thursday's session with a gain of 5 cents or more, they will have completely clawed back all of last week's losses. Earlier this week, France lowered its projections of domestic wheat supply and ending stocks, which tightens the entire global picture for certain categories of milling wheat. Meanwhile, on the Southern Plains of the U.S., the growing winter wheat crop's moisture scenario has benefitted greatly from recent rains, with more in the forecast. Grain futures markets will close regularly at 1:20 p.m. CT Thursday but won't re-open until 7:00 p.m. CT on Easter Sunday. The spot priced SRW Index came to $3.93, showing national average SRW basis steady at 41 cents under the May Chicago contract, and the HRW Index at $3.40 showed average basis steady at 90 cents under the May Kansas City contract. The average spot spring wheat bid collected by DTN Wednesday was $4.88 per bushel, or 41 cents under the May Minneapolis contract.

Elaine Kubcan be reached at elaine@masteringthegrainmarkets.com

Follow Elaine Kub on Twitter @elainekub

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Elaine Kub