DTN Closing Grain Comments

Soybeans Pick Up a Dime; Commodities Generally Higher

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN illustration by Nick Scalise)

General Comments:

Corn was up 3/4 cent in the March contract and up 3/4 cent in the July. Soybeans were up 10 1/4 cents in the March contract and up 10 cents in the July. Wheat closed down 2 1/2 cents in the March Chicago contract, down 2 1/4 cents in the March Kansas City, and down 3/4 cent in the March Minneapolis contract. The March U.S. dollar index is down 0.13 at 92.79. February gold is up $9.40 at $1,288.20 while March silver is up 18 cents and March copper is up $0.0405. The Dow Jones Industrial Average is down 37 at 24,717. February crude oil is up $1.47 at $59.94. February heating oil is up $0.0671 while February RBOB gasoline is up $0.0318 and February natural gas is down $0.003.

Corn:

March corn ended up 3/4 cent Tuesday, putting in a quiet day of trading that is apt to be repeated a few more times this week. Fundamentally and technically, the outlook for corn has been stuck on bearish for several months as 2017's 14.6 billion bushel harvest ensured that 2017-18 will be well-supplied with corn. One thing we are watching for is an increase in the pace of U.S. corn exports as Brazil's FOB corn prices have jumped higher the past couple weeks and are currently at $4.24, 25 cents higher than the price at the U.S. Gulf. So far, however, U.S. export activity is slow with Tuesday's inspections report putting total inspections down 40% in 2017-18 from a year ago. At 8 a.m. CST, USDA did report that Mexico bought 5.3 million bushels (134,148 mt) of U.S. corn for 2017-18. Friday's CFTC data showed noncommercials a little more bearish in corn on Dec. 19, increasing net shorts from 75,849 to 92,972. Commercials increased net longs to 72,774, still finding attractive value in the mid $3s. Corn prices should be near support, but so far, the trend in March corn remains down. DTN's National Corn Index closed at $3.15 Friday, priced 37 cents below the March contract and near its highest price in four months. In outside markets, most other commodities were higher. February crude oil was up $1.47, threatening a new 2-year high after Bloomberg news reported on an oil pipeline explosion in Libya.

Soybeans:

March soybeans closed up 10 1/4 cents at $9.70 1/2, getting boosts from crop weather concerns in Argentina and Tuesday's 2% gain in palm oil prices. Paraguay and southern Brazil received rain over the weekend and Brazil has more rain in this week's forecast, but expected amounts for Argentina are lighter this week with hot temperatures adding stress to crops. Tuesday's rally probably also wrong-footed some traders as last week's prices had just fallen to their lowest levels in three months. Friday's CFTC data showed noncommercials in soybeans cut back their bullish positions for the second consecutive week, reducing net longs from 55,245 to 10,282. Overall, South America's crop conditions are generally favorable as we head toward the end of 2017, but weather-related crop reductions are still possible. For now, the trend in March soybeans is down. DTN's National Soybean Index closed at $8.81 Friday, priced 68 cents below the January contract and near its lowest price in over two months.

Wheat:

March Chicago wheat closed down 2 1/2 cents Tuesday at $4.22 1/4. After prices worked their way to a two-week high last Thursday, helped by commercial buying and a slow creep of gradually drier conditions around the western U.S. Plains, buying interest faded on Friday and again on Tuesday. Last week's buying was also helped by concerns of sub-freezing temperatures in the southwestern U.S. Plains, which showed up on schedule Friday and are expected to stay through this week. However, as discussed last week, it is difficult for traders to take the news of cold temperatures in December too seriously. Friday's CFTC data showed noncommercial traders still bearish in Chicago wheat on Dec. 19, holding 98,684 net shorts while commercials stay with 99,085 net longs. The trend in winter wheat remains down, but at these low prices, a sideways path is likely. DTN's National SRW index closed at $3.89 Friday, priced 36 cents below the March contract and up from its lowest price in seven months. DTN's National HRW index closed at $3.70, near its highest price in two months.

Todd Hultman can be reached at todd.hultman@dtn.com

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Todd Hultman