DTN Before The Bell Grain Comments

Santa in Five

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

Morning CME Globex Update:

On the fifth day before Christmas, grains are keeping quiet while soybeans start with a little bounce higher on the heels of Tuesday's new three-month low. Stocks are expected to start higher and outside commodities are mostly higher with February gold up $4.70.

Other Markets:

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

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Corn:

March corn was up a quarter-cent early Wednesday, finding no reason to stray far from its 2017 low in the week before Christmas. USDA's next WASDE report on Jan. 12 will give us the final harvest estimate for 2017 and it's probably going to be close to the current 14.58 billion bushel estimate. USDA's Grain Stocks report on the same day will tell us about first quarter demand for 2017-18 and the concern is that exports have not been much help. With ending U.S. corn stocks looking safely above 2 billion bushels in 2017-18, and commercials currently showing no sign of needing to bid prices higher, March corn remains under bearish pressure, near its lowest prices of 2017. DTN's National Corn Index closed at $3.09 Tuesday, priced 38 cents below the March contract and down from its highest price in two months. In outside markets, the March U.S. dollar index is up 0.01 while other commodities are mostly higher.

Soybeans:

January soybeans were up 3 1/2 cents early, starting the day with a small response to Tuesday's new three-month low. Wednesday's satellite map shows likely rain activity in southern Brazil and the seven-day forecast continues to expect a broad coverage of light to moderate showers for both, Brazil and Argentina. Standing eleven days from flipping the calendar to 2018, there are still some concerns of dry conditions in southern Brazil and Argentina, but overall crop conditions are good and Brazil appears on track for another big soybean harvest, provided there is no late surprise. Fundamentally, U.S. soybean supplies are comfortable, but not excessive after five consecutive big harvests. Technically, the trend in January soybeans is down in line with the lack of serious weather threat down south. DTN's National Soybean Index closed at $8.87 Tuesday, priced 69 cents below the January contract and at its lowest price in two months.

Wheat:

March Chicago wheat was down a penny, staying near its lows of 2017 in December while wheat stores are plentiful around the globe, the result of a fifth consecutive successful world wheat harvest. Here in the U.S., production was down of course as a result of a smaller planting and drought in the northwestern U.S. Plains, but increased production from Russia and Europe set a new record for world wheat production and is making U.S. exports difficult this winter. Those same northwestern U.S. Plains are still showing drought this winter and are getting snow on Wednesday morning. The forecast for the southwestern U.S. Plains remains dry with this week's rain expected in the southeastern U.S., as far west as Arkansas. Technically, the trend remains down in Chicago wheat and noncommercial traders are heavily short, meaning that bouts of short-covering rallies are possible. DTN's National SRW index closed at $3.83 Tuesday, priced 36 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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Todd Hultman