DTN Before The Bell Grain Comments

Morning CME Globex Update:

At 8 a.m. CST, USDA announced China bought 14.6 million bushels (396,000 mt) of U.S. soybeans and 6.6 million bushels (168,000 mt) of grain sorghum, both for 2017-18. Friday's CFTC data showed last week's new lows in corn and wheat brought out more bears, while bulls were lost in soybeans, but all three grains were trading higher early Monday.

Other Markets:

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

Corn:

March corn was up 3/4 cent early Monday, still struggling to get any lift above its lows for the year. Friday's Commitments of Traders Report from CFTC showed noncommercials turned more bearish after corn dropped to a new low on Dec. 12, increasing net shorts from 53,708 to 75,849. Commercials responded to Tuesday's new low by increasing net longs to 63,163, a show of contrary support for corn's lower prices. While commercials are willing to buy corn's lower prices, we have not yet seen a willingness to bid prices higher, but that may change in early 2018 with farmers reluctant to sell at these lower prices. On the noncommercial side, there has not been any bullish news for corn lately and Central Argentina received beneficial rain over the weekend so shorts seem content in their positions. Technically, the trend remains down in March corn, but support should be near at these cheap prices. DTN's National Corn Index closed at $3.08 Friday, priced 39 cents below the March contract and down from its highest price in two months. In outside markets, the March U.S. dollar index is down 0.29 with a vote on tax reform expected this week. Outside commodities are mostly higher.

Soybeans:

At 8 a.m. CST, USDA announced China bought 14.6 million bushels (396,000 mt) of U.S. soybeans for 2017-18. January soybeans were up 2 1/2 cents earlier Monday in spite of central Argentina receiving beneficial rains over the weekend. Friday's CFTC data showed noncommercials turning less bullish as net longs fell from 92,585 to 55,245 as of Dec. 12, just as January soybeans reached a new three week low. Prices have fallen a little more since then and are now struggling to stay above the November low of $9.67, an important line of technical support. The key for soybeans continues to be South America's weather and, overall, crops are likely doing well so far. January tends to be the critical time for pod-filling so things are still uncertain while La Nina shows signs of weakening, a potentially bearish change. Technically, the trend in January soybeans remains sideways, but prices have to stay above $9.67 for that to remain true. DTN's National Soybean Index closed at $8.97 Friday, priced 70 cents below the January contract and within 8 cents of its November low.

Wheat:

At 8 a.m. CST, USDA announced China bought 6.6 million bushels (168,000 mt) of grain sorghum for 2017-18. Earlier, March Chicago wheat was up 3 1/2 cents with hints of light commercial buying to start the week. As anticipated, Friday's CFTC data showed noncommercial traders responded to last week's new low with an increase of net shorts, going from 74,071 to 99,863, their most bearish position since April. Commercials matched the other side, increasing net longs to 100,376, which is also the most since April and more evidence of wheat's attractive economic value at these low prices. Once again, noncommercial traders have loaded up on short positions at historically cheap prices and are vulnerable to short-covering, if the market could just find an excuse to buy wheat. The U.S. Drought Monitor is looking dry in the western Plains this winter and the seven-day forecast is mostly dry, but chances for rain in eastern Texas and Arkansas will help ease drought in those areas. For now, the trend in Chicago wheat remains down, but commercials continue to provide active support and there could be bouts of short-covering rallies in wheat's future. DTN's National SRW index closed at $3.81 Friday, priced 37 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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