DTN Before The Bell Grain Comments

U.S. Dollar Starts Lower in 2018

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

Morning CME Globex Update:

Tuesday morning will start off a new year of trading for U.S. grain futures at 8:30 a.m. CST after most of the U.S. endured a weekend of bitter cold temperatures. The March U.S. dollar index is giving grains early encouragement, trading at its lowest prices in three months.

Other Markets:

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

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Corn:

March corn finished 2017 at $3.50 3/4, up roughly four cents from its low for the year, but still weighed down by heavy supplies and a slow pace of U.S. exports. Friday's weekly report showed U.S. corn shipments down 36% from a year ago even though spot FOB corn prices are 26 cents cheaper at the U.S. Gulf than at Brazil's ports. Friday's CFTC data showed noncommercials less bearish in corn, reducing net shorts from 92,972 to 74,657 as of Dec. 26. Commercials took advantage of corn's slightly higher prices and reduced net longs to 57,446. With little happening to change the minds of bearish noncommercials, the trend in December corn futures remains down while cash prices are making gradual gains. DTN's National Corn Index closed at $3.15 Friday, priced 35 cents below the March contract and near its highest price in four months. In outside markets, the March U.S. dollar index is down 0.24, trading at its lowest prices in three months after RTTNews.com reported a manufacturing index for Europe jumped to 60.6 in December, more than was expected. February crude oil is not showing much response to reports of anti-government protests in Iran, trading down 4 cents.

Soybeans:

March soybeans gained a nickel Friday to finish the week and year at $9.61 3/4. The primary concern of soybean traders continues to be South America's weather and more rain fell over central and southern Brazil over the weekend. The latest seven-day forecast continues to expect more rain across Brazil, but only lighter amounts for Argentina as the country deals with hotter temperatures. As soybean prices fell lower in December, Friday's CFTC data showed noncommercials turned lightly bearish in soybeans with 23,331 net shorts as of Dec. 26. Commercials continue to find soybeans' lower prices attractive and increased net longs from 29,127 to 59,953. The trend in soybeans is down as we start 2018 and crop conditions look generally favorable in South America with modest concerns of hot and dry weather in Argentina. DTN's National Soybean Index closed at $8.86 Friday, priced 76 cents below the March contract and up from its lowest price in over two months. Among January contracts, delivery intentions totaled 21 for soybeans, 300 for soybean meal, and 34 for soybean oil.

Wheat:

March Chicago wheat ended at $4.27 Friday, still near its lowest spot prices in eleven years and keeping a low profile as it often does in the winter months. Dry conditions and bitter cold temperatures over the weekend may eventually prove hurtful to the next winter wheat crop, but it will be difficult to assess crop conditions until they re-emerge in the spring. The latest seven-day forecast remains mostly dry for the southwestern U.S. Plains, not showing any relief yet from this recent dry spell. Friday's CFTC data showed noncommercials still heavily bearish in Chicago wheat with 94,767 net shorts as of Dec. 26. Commercials remain loyal to the long side, holding 96,335 contracts net long. Of course, wheat prices can trade lower, but with prices this cheap and noncommercial traders already heavily short, further downside risk should be limited. Technically, the trend in winter wheat remains down with bargain-hunting commercials offering support. DTN's National SRW index closed at $3.95 Friday, priced 32 cents below the March contract and near its highest price in three months.

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

Follow Todd on Twitter @ToddHultman1

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Todd Hultman