DTN Before The Bell Grain Comments

Morning CME Globex Update:

Grain and oilseed futures experienced subdued bullishness Friday morning. A struggling U.S. dollar this week has lifted nominal commodity prices across the board, and considering the continued need for export sales progress, the currency's prospects may continue to be influential to grain prices.

Other Markets:

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

Corn:

Will they or won't they shut down the government? As long as that question remains unanswered by the U.S. Senate on Friday, currency traders will continue to express uncertainty in the U.S. dollar, and a lower dollar tends to automatically boost the price tags for dollar-denominated commodities, like corn. The U.S. Dollar Index is lower again Friday morning, at 90.4, but still hovering above its nadir from Thursday's peak fear-of-shutdown moment. Meanwhile, the corn chart remained in a tight trading range overnight, slightly higher due to its relationship with the dollar, but not with any fresh bullish momentum. Consistent futures spreads, at about 4 cents per month through September, show that commercial grain trading facilities feel comfortable about supplies throughout the near future. The weekly export sales report showed better-than-expected sales at 1.88 million metric tons. The DTN National Corn Index, an average of cash bids around the country, was $3.20 Thursday, on a slow climb off the sub-$3 harvest lows. The national average basis level remains at 32 cents under the March futures contract.

Soybeans:

Weekly export sales numbers, released on Friday during this short week, were a boon to soybean futures trade, showing better-than-expected soybean sales at 1.24 million metric tons, with China, Mexico, and Egypt leading the way. The four-week average leading up to this report was 31 percent lower than that, and the general attitude has been previously bearish about the U.S. soybean market's ability to compete against Brazil for China's business. The overall shipment scenario is still bearish, and futures trade hasn't immediately jumped in response to last week's export sales numbers, but nevertheless, this could help sustain some upward momentum as commercial traders buy in their needs and the market churns 3 or 4 cents higher per day. In the cash market, the DTN National Soybean Index came in at $9.05 Thursday afternoon, showing the average U.S. cash bid remained at 68 cents under the March futures contract. Through the end of January, however, there are a few processors in the Corn Belt who appear to be pushing their bids for quick-ship or prompt soybeans, so farmers looking to move unpriced soybeans may benefit from shopping around for an eager basis bid.

Wheat:

Over 40 percent of planted winter wheat fields are affected by some sort of drought, which is expected to continue through the spring, so this does add some bullish justification to the higher-trending prices on the July KC wheat futures chart. Thursday's Drought Monitor showed deeper drought in the Southern Plains and specifically the Oklahoma Panhandle. Mostly, however, Friday morning's 1- to 2-cent gains on the wheat board can be explained away by the broadly higher trade throughout the commodity sector. April live cattle futures, for instance, have risen over 3 percent so far this week, potentially making any stressed wheat fields more valuable as grazing than as harvested grain. Old crop Hard Red Winter wheat's cash bids averaged $3.86 Thursday, or 44 cents under the March KC contract. The SRW Index was $3.95 or 31 cents under the March Chicago contract. Greater strength of demand is seen for Hard Red Spring wheat, with its cash index at $5.92 and average basis at 19 cents under the March Minneapolis contract.

Elaine Kubcan be reached at elaine@masteringthegrainmarkets.com

Follow Elaine on Twitter @elainekub

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