DTN Before The Bell Grain Comments

Grains Quietly Mixed, Soybeans Lower

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

Morning CME Globex Update:

Once again, USDA's weekly report of exports showed a bearish pace for all three grains in 2017-18, but prices stayed quiet early, not surprised by the familiar news. The March U.S. dollar index is slightly higher after the U.S. Commerce Department slightly reduced its estimate of GDP growth in the third quarter.

Other Markets:

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

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Corn:

March corn was up a half-cent early Thursday, holding in its same familiar pattern near its 2017 low while Thursday morning snow stretches from the Rockies to southern Minnesota. Travel will be interrupted by a mix of rain and snow across the Midwest the next few days, but this is more of a concern for holiday travelers than it is for grain prices. Early Thursday, last week's export sales and shipments of corn totaled 61.3 and 27.6 million bushels respectively, higher sales than the previous week, but still a bearish combination that put total corn shipments down 36% in 2017-18 from a year ago. In South America, crop conditions remain generally favorable with rain in this week's forecast helping to ease concerns of dryness in Argentina. There is some concern that Brazil's second corn crop may be limited after soybeans got a late planting start and that will be watched in early 2018. For now, the trend in March corn remains down with noncommercial traders bearish. DTN's National Corn Index closed at $3.12 Wednesday, priced 38 cents below the March contract and near its highest price in two months. In outside markets, the March U.S. dollar index is up 0.13 after the U.S. Commerce Department said real GDP was up 2.3% in the third quarter from a year ago, slightly less than estimated last month.

Soybeans:

March soybeans were down 1 3/4 cents early Thursday, continuing to show bearish pressure from mostly favorable crop conditions in South America. This season's lower-than-expected soybean exports have also been a concern and, on Wednesday, Bloomberg news reported that China has reduced the level of allowable impurities in U.S. soybean shipments from 2% to 1% while enforcing no such restrictions on Brazil. The move appears to be politically motivated specifically against the U.S. and explains part of why U.S. soybean shipments are down this year, even though FOB soybean prices are 35 cents cheaper at the U.S. Gulf than at Brazil's ports. Early Thursday, USDA said last week's export sales and shipments of soybeans totaled 64.0 and 56.6 million bushels respectively, another bearish combination for the week that has total soybean shipments down 13% in 2017-18 from a year ago. Technically, the trend remains down in March soybeans. DTN's National Soybean Index closed at $8.86 Wednesday, priced 68 cents below the January contract and at its lowest price in two months.

Wheat:

March Chicago wheat was up a penny early, adding to Wednesday's modest gain while still keeping a low profile on the first official day of winter in 2017. Sub-freezing temperatures are headed into the southwestern U.S. Plains and will present some risk to winter wheat crops, currently growing in dry conditions with no protection. It is difficult for traders to get too excited about this as it is winter and wheat has survived far worse before. In the bigger picture, the main drivers of wheat prices continue to be the world's plentiful supplies and slow pace of U.S. exports. Early Thursday, USDA said last week's export sales and shipments of wheat totaled 29.3 and 21.2 million bushels respectively, another bearish showing for the week. Total wheat shipments are down 7% in 2017-18, slightly above USDA's estimated pace, but not making any dent in the U.S. wheat surplus. The trend in winter wheat prices remains down where prices are fundamentally cheap. DTN's National SRW index closed at $3.86 Wednesday, 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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Todd Hultman