DTN Before The Bell Grain Comments

Wheat Leads Grains to Higher Start

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

Morning CME Globex Update:

Corn, soybeans, and all three wheats are higher early Wednesday with winter wheat showing the biggest gains as dry winter conditions remain a concern. USDA will update its supply and demand estimates in Thursday's WASDE report.

Other Markets:

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

Corn:

March corn was up a penny as Tuesday's snow across the central Corn Belt moved off to the eastern Midwest by Wednesday morning, headed to the northeastern U.S. later in the day. In South America, traders are looking at a satellite map that is mostly dry on Wednesday morning for both, Brazil and Argentina. Drier conditions will help soybean harvest progress and corn planting in Brazil, but add to crop stress in Argentina where temperatures are in the 90s. Light showers and milder temperatures are expected to ease Argentina's stress later this week, but yields are likely being lost. This is the time of year when cash corn prices typically work a little higher in the U.S. while corn is stored away. We are seeing that pattern again this winter as cash prices have reached their highest level in five months. It will likely take another 10 cents or more to entice corn out of the bins so in the meantime, the trend remains up in March corn as prices challenge resistance at $3.65. DTN's National Corn Index closed at $3.33 Tuesday, priced 31 cents below the March contract and at its highest price in five months. In outside markets, Dow Jones futures are down 97 points and the March U.S. dollar index is up 0.31 as investors are still nervous about the recent drop in the stock market.

Soybeans:

March soybeans were up a quarter-cent at the morning break, after having traded both sides of Tuesday's close overnight. March soybean meal is up $2.10. Traders appear to have gotten over the shock of Monday's falling stock prices and are once again weighing the mixed market clues that we find in the soybean market. Thursday's WASDE report could have two bearish adjustments: a higher estimate of U.S. ending stocks as a result of a lower export estimate and a possible nudge higher in Brazil's already large crop estimate. On the bullish side, Argentina remains hot and dry and a lower crop estimate from USDA seems likely. Fundamentally, the outlook for soybeans still leans bearish, but the trend in March soybeans remains broadly sideways as traders still don't know how Argentina will turn out or how big demand will be in 2017-18 as the world economy shows signs of picking up. DTN's National Soybean Index closed at $9.17 Tuesday, holding in its sideways range and priced 69 cents below the March contract.

Wheat:

March Chicago wheat was up a nickel early Wednesday with commercial buyers putting pressure on noncommercial traders holding short positions. Of course, it helps the bullish case for wheat prices that the seven-day forecast continues to look dry for the western Plains, especially in the South where temperatures have seen both extremes this winter. At the same time, we can't forget that the U.S. crop is just a small piece of world wheat production these days and we are a long way from knowing how 2018 will go for all the crops. Even Thursday's WASDE report won't help much in that regard as the most useful numbers are still looking backward. Dry winter weather and noncommercial short-covering have lifted winter wheat prices from their lows and for now, the trend remains up. DTN's National SRW index closed at $4.16 Tuesday, priced 30 cents below the March contract and down from its highest price in five months.

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

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Todd Hultman