Morning CME Globex Update:
One day after President Trump drew applause from farmers in Nashville, market prices showed little reaction as traders continue to face abundant supplies of grain and the possibility of more bearish USDA reports on Friday.
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March corn was up 1 1/4 cents Tuesday, finding early interest among bargain hunters while prices are back near their lows of 2017. Tuesday is typically a light news day for grains and may also be a light trading day as traders are apt to be cautious ahead of Friday's WASDE and Grain Stocks reports. With U.S. corn shipments down 35% in 2017-18 from a year ago, it is difficult to imagine how Friday's new estimates could be anything other than bearish unless USDA surprises us with a lower yield estimate. The most encouraging factor for higher corn prices lately has come a steady increase of cash corn prices since mid-November. That suggests that domestic demand has been active, but more is needed to pull the March futures contract up from its lows. So far, the trend remains sideways in March corn with Friday's reports adding bearish risk. DTN's National Corn Index closed at $3.14 Monday, priced 33 cents below the March contract and down from its highest price in four months. In outside markets, the March U.S. dollar index is up 0.20 along with stock market futures also trading higher overnight. Outside commodities are mixed, but February gold is down $7.90.
March soybeans were down 3 3/4 cents early Tuesday, encountering bearish pressure ahead of Friday's USDA reports. Like corn, U.S. soybean exports have been disappointing with soybean shipments down 14% in 2017-18 from a year ago. The crush incentive here in the U.S. is attractive, but without a more active export pace, it is difficult to imagine any bullish surprises in Friday's USDA reports. Meanwhile, the weather in South America continues to look much the same with rain forecast this week across central Brazil while southern Brazil and Argentina are drier with periods of hot temperatures. Argentina's drier conditions have given traders pause and commercials have increased their net long positions, but the trend in March soybeans remains down until proven otherwise. DTN's National Soybean Index closed at $8.96 Monday, priced 71 cents below the March contract and up from its lowest price in over two months. Among January contracts, delivery intentions totaled 21 for soybeans, 170 for soybean meal, and 214 for soybean oil early Tuesday. January grain futures contracts expire early Friday.
March Chicago wheat was down 1 3/4 cents early, holding mostly sideways the past month as plentiful supplies of domestic winter wheat contain most concerns about this winter's dry conditions and exposure to bitter cold temperatures. Subfreezing temperatures are expected to return to the southwestern U.S. Plains on Thursday, but they won't be as cold as what was experienced over the New Year weekend and probably won't be able to generate much short-covering. Like corn and beans, U.S. wheat shipments are down 8% in 2017-18 from a year ago which suggests we will see a bearish report on Dec. 1 wheat stocks from USDA on Friday. In spite of abundant domestic and global supplies of wheat, the trend in winter wheat remains sideways with no bullish fundamental argument in view. DTN's National SRW index closed at $3.96 Monday, priced 32 cents below the March contract and down from its highest price in over two months.
Todd Hultman can be reached at firstname.lastname@example.org
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