DTN Before The Bell Grain Comments

Wheat Finds a Tourniquet

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

Morning CME Globex Update:

Row crops were starting lower Tuesday while somehow, Chicago and K.C. wheat were able to stop the bleeding of prices at new lows and posted small gains. Other commodities are mostly lower.

Other Markets:

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

Corn:

March corn was down a penny early Tuesday, near its lows for the year with the U.S. harvest getting closer to the finish line. Late Monday, USDA said 95% of corn was harvested, not quite the 98% of a year ago. If USDA is correct, roughly 730 million bushels are still standing in states like Indiana, Ohio, Michigan, and Wisconsin. The next five days are expected to be mostly dry for the Corn Belt before light rain returns to the eastern states over the weekend. Monday's CFTC data showed noncommercials still bearish in corn as of Nov. 21, but they dropped 32,476 net shorts after the previous week's brief rally and are now holding 92,637 net shorts. Commercials took advantage of the previous week's rally and trimmed back net longs from 121,614 to 86,238. Technically, March corn remains under bearish pressure wit prices in the vulnerable position of relying on commercial buying as the only source of support. DTN's National Corn Index closed at $3.04 Monday, priced 35 cents below the December contract and down from its highest prices in two months. In outside markets, the December U.S. dollar index is up 0.12 and other commodities are mostly lower.

Soybeans:

January soybeans were down 4 3/4 cents early Tuesday, erasing Monday's gain with January soybean meal also trading lower, down $2.70 from Monday's new one-month high. So far, both January soybeans and meal are staying below their October highs as traders continue to keep an eye on how South America's crops are doing. The latest seven-day forecast down south shows the heaviest rains expected in eastern Brazil and even western Argentina has a better chance for rain toward the end of the week. Overall, as we near the southern equivalent of the end of May, there are early concerns of dry conditions in Argentina, but nothing serious enough yet to get traders excited. Monday's CFTC data showed noncommercials still lightly bullish in soybeans as of Nov. 21 with 52,243 net longs. For now, the trend remains sideways in January soybeans. DTN's National Soybean Index closed at $9.22 Monday, priced 74 cents below the January contract and near its highest prices in three months. At 8 a.m. CST, USDA said last week's announcement of a 130,000 mt sale of soybeans to China was supposed to be a sale to unknown destinations for 2017-18.

Wheat:

March Chicago wheat was up a half-cent early, hovering near its lowest prices in 2017. Late Monday, USDA said 92% of winter wheat was emerged, even with the five-year average. DTN's Winter Wheat Condition Index fell 5 points to 130 and was down from last year's 147 as we hit the winter break. USDA's next update of crop ratings will come in April 2018. Everything about winter wheat remains bearish with plenty available after five consecutive years of good growing weather around the globe. Monday's CFTC data showed noncommercials still bearish in Chicago wheat with 66,825 net shorts as of Nov. 21, little change from the previous week. Commercials slightly reduced their position to 69,296 net longs. If there is good news for wheat prices it is that traders are already short and prices are already cheap so downside potential should be limited. And a surprise event is always possible, but less likely in winter. DTN's National SRW index closed at $3.78 Monday, priced 31 cents below the December contract and holding above its August low while futures contracts make new lows.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman