DTN Before The Bell Grain Comments

Soy Complex Defies Holiday Trend, Starts Higher

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

Morning CME Globex Update:

The day before Thanksgiving is typically a snoozer for grain markets, but soybeans are ignoring the age-old tradition and starting modestly higher throughout the whole complex. Corn and wheat are staying close to Tuesday's closes and may not find much attention from traders wanting an early start out the door.

Other Markets:

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

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Corn:

December corn was up a quarter-cent early Wednesday, another quiet start, but also holding its gains of the past few sessions. Wednesday's weather map shows a patch of snow in North Dakota and northern Michigan as the Corn Belt woke up to colder temperatures. Most of the region however, is expected to stay mostly dry the next ten days, helping late harvest efforts. The obvious highlights for the corn market are bearish: there is plenty of it and U.S. exports are slow. More recently however, we see serious buying from commercials finding value at corn's cheaper prices. We also see cash corn prices holding firm, now just two cents from their two-month high. The trend in December corn remains down, but noncommercial bears are vulnerable to a short-covering rally, holding their largest short position in four years. DTN's National Corn Index closed at $3.09 Tuesday, priced 36 cents below the December contract and near its highest prices in two months. In outside markets, most other commodities are trading higher with January crude oil up 92 cents a barrel after API reported a 6.4 million barrel decline in last week's inventories.

Soybeans:

January soybeans were up 5 1/4 cents with early signs of light commercial buying in both, soybean meal and oil. Wednesday morning's temperatures are colder, but this week's forecast of drier weather is good news for those still trying to get soybeans out of the fields. Brazil's satellite map shows possible rain in central Brazil on Wednesday, more to the eastern side of the country. Central Brazil's dry start was the early concern this season, but more recently, forecasts have turned drier for southern Brazil and Argentina, which is possibly related to the La Nina influence. We can't point to specific problems yet, but FOB prices in Brazil are at $10.70 on Wednesday morning, back near their highest levels in three months and 32 cents above prices at the U.S. Gulf. Technically, the short-term trend in January soybeans has turned higher with prices nearing resistance at the October high of $10.13. DTN's National Soybean Index closed at $9.14 Tuesday, priced 75 cents below the January contract and near its highest prices in three months.

Wheat:

December Chicago wheat was down a half-cent early while most other wheat contracts were starting slightly higher. So far in November, wheat prices have held in a narrow sideway trading range and that is likely to continue this week with grain markets closed on Thursday for the Thanksgiving holiday and then shortened on Friday by an early close at 12:05 p.m. CST. It doesn't seem likely that the current stretch of dry weather in the southern Plains is going to impact prices before next spring, but it is interesting to see signs of improving demand for wheat operating under the radar among cash prices while the futures market languishes near its lowest spot prices in eleven years. On the surface, the fundamental outlook remains bearish, but technically, winter wheat continues to trend sideways with commercial support for Chicago wheat prices. DTN's National SRW index closed at $3.93 Tuesday, priced 32 cents below the December contract and holding well above its August low.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman