DTN Before The Bell Grain Comments

Morning CME Globex Update:

At 8 a.m. CST, USDA announced 9.4 million bushels (257,000 mt) of U.S. soybeans were sold to China and another 4.6 million bushels (126,000 mt) were sold to unknown destinations, both for 2017-18. 5.3 million bushels (134,503 mt) of U.S. corn were sold to Costa Rica for 2017-18. 4.8 million bushels (130,000 mt) of SRW wheat were sold to unknown destinations for 2017-18. Nearly all commodities were trading higher early Friday, including corn, soybeans, and all three wheats. Even palm oil, the biggest loser of 2017, was up 2.5% overnight.

Other Markets:

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

Corn:

At 8 a.m. CST, USDA announced 5.3 million bushels (134,503 mt) of U.S. corn were sold to Costa Rica for 2017-18. March corn was up 3/4 cent earlier, staying close to its lows for the year with commercial bargain hunting providing the only visible means of support for prices. As with wheat, it continues to be difficult to find anything bullish to say for corn prices as U.S. supplies are plentiful and exports are losing out to South American corn. Friday's weather map shows snow in North Dakota and Michigan, but most of the Corn Belt is in for dry weather and mild December temperatures, which is favorable for transporting grain. At these low prices however, farmer selling is apt to be light, at least until January and maybe even then. Futures spreads show no sign of commercials bidding prices higher and that makes sense as South American crops have not shown any significant weather threat. As noncommercial traders are already net short, downside risk should be limited, but the trend in March corn remains down. DTN's National Corn Index closed at $3.09 Thursday, priced 39 cents below the March contract and down from its highest price in two months. In outside markets, nearly all commodities are starting the day higher.

Soybeans:

At 8 a.m. CST, USDA announced 9.4 million bushels (257,000 mt) of U.S. soybeans were sold to China and another 4.6 million bushels (126,000 mt) were sold to unknown destinations, both for 2017-18. January soybeans were up 3 1/4 cents at the morning break, saved from making a new two-month low by a 2.5% overnight jump in March palm oil prices that also helped push January soybean oil up 0.29 by the morning break. As mentioned in Tuesday's article, "Report Card Time," palm oil futures are on track for becoming the worst performing commodity in 2017. It's bearish influence also extended to soybean oil and canola prices so Friday's bounce offered some welcome relief. The main concern for soybeans of course, is South America's weather and that continues to look favorable so far, with light to moderate rain in the seven-day forecast for southern Brazil and Argentina. The weekly stochastic in soybeans has turned lower and is putting bearish pressure on noncommercials, but until January soybeans close below support at $9.67, the trend remains sideways. DTN's National Soybean Index closed at $8.96 Thursday, priced 71 cents below the January contract and within a dime of its November low.

Wheat:

At 8 a.m. CST, USDA announced 4.8 million bushels (130,000 mt) of SRW wheat were sold to unknown destinations for 2017-18. March Chicago wheat was up a penny, getting a small lift of bargain hunting after dipping to new contract lows earlier this week. Thursday's U.S. Drought Monitor did show increased areas of abnormally dry conditions throughout the western Plains and, if nothing else, it may have spurred a light amount of noncommercial short-covering. But the bigger view continues to be that the U.S. has an abundance of wheat which it has a difficult time exporting while the rest of the world also has plenty. Here in December, a drier looking U.S. Drought Monitor doesn't carry much weight as far as prices are concerned, but is worth keeping an eye on as we go through winter. For now, noncommercial traders remain bearish and Friday afternoon's CFTC report will likely show an increase of net shorts corresponding to this week's new lows. A heavy noncommercial short position at these cheap prices makes a good recipe for short-covering, if only prices could find a bullish reason to trigger some buying. DTN's National SRW index closed at $3.80 Thursday, priced 38 cents below the March contract and up from its lowest price in seven months.

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

FollowTodd on Twitter @ToddHultman1

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