DTN Before The Bell Grain Comments

Soybeans Start Higher, Meal at New Highs

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

Morning CME Globex Update:

January soybeans were up 10 1/2 cents early Monday, helped by commercial buying in soybeans and meal that took January meal to its highest prices in four months. Corn and winter wheat were a little higher in spite of Monday's higher U.S. dollar index.

Other Markets:

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

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Corn:

March corn was up 1 1/4 cents early Monday after a quiet overnight session. Monday's weather map shows snow in the Dakotas and rain in Wisconsin and Michigan with colder temperatures expected across the Corn Belt after Monday. USDA's weekly Crop Progress reports are done for the season, but if there was one more, it would likely show corn 98% or 99% harvested. Friday's CFTC data showed noncommercials still heavily bearish in corn with 91,852 net shorts as of Nov. 28. Commercials trimmed net longs from 86,238 to 83,304, but still find attractive value in March corn prices near the mid $3s. Technically, the trend in corn remains down, but prices are holding above the November low and noncommercial bears remain vulnerable to short-covering. DTN's National Corn Index closed at $3.15 Friday, priced 44 cents below the March contract and near its highest prices in two months. Early Monday, 1,270 delivery intentions were assigned to December corn. In outside markets, the December U.S. dollar index is up 0.28 and Dow Jones futures are up 208 points after the U.S. Senate passed a tax reform bill over the weekend.

Soybeans:

January soybeans were up 10 1/2 cents early Monday with futures spreads showing signs of early commercial buying in both, soybeans and meal to start the week. Looking at Brazil's FOB prices, we see a 21 cent jump from Friday's close to $10.82 early Monday, the highest price since March. The sudden bullishness over the weekend appears related to a drier forecast for Argentina and ongoing concerns about the recent development of La Nina. Friday's CFTC data showed noncommercials still lightly bullish in soybeans with 62,873 net longs as of Nov. 28. There is still plenty of uncertainty around South America's next crops and the trend in January soybeans remains sideways, but the trend in January meal has turned higher with prices trading at their highest level in four months. DTN's National Soybean Index closed at $9.22 Friday, priced 73 cents below the January contract and near its highest prices in three months. Friday's delivery intentions for December contracts totaled 294 for soybean meal and 155 for soybean oil.

Wheat:

March Chicago wheat was up 4 cents Monday, helped by an early show of light commercial buying. As anticipated Friday, heavy rain amounts fell on wheat ready for harvest in southeastern Australia over the weekend, likely causing some loss. This is one of the features related to La Nina in late 2017. At the same time, increased patches of drought have been appearing in the southern U.S. Plains and this week's forecast remains mostly dry for the region. Better rain chances are seen for Arkansas and the southeastern U.S. Friday's CFTC data showed noncommercials even more bearish in Chicago wheat with 82,289 net shorts as of Nov. 28, the most since May. Commercials increased net longs to 83,012, also the most since May. This is a familiar stand-off in Chicago wheat that we have seen before. It is reasonable to expect mostly sideways trading ahead with occasional bouts of noncommercial short-covering, should they find something get nervous about. DTN's National SRW index closed at $3.97 Friday, priced 42 cents below the March contract and holding above its August low while futures contracts make new lows. Among December contracts, there were 437 delivery intentions for Chicago wheat, 27 for K.C. wheat, and 217 for Minneapolis wheat early Monday.

Todd Hultmancan be reached at todd.hultman@dtn.com

FollowTodd on Twitter @ToddHultman1

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Todd Hultman