DTN Closing Grain Comments

Grains Survive Week of Lower Stock Prices

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

General Comments:

Corn closed down 3 3/4 cents in the March contract and was down 2 3/4 cents in the December. Soybeans closed down 4 3/4 cents in the March and down 4 1/2 cents in the November. Wheat closed down 7 1/4 cents in the March Chicago, down 9 cents in the March Kansas City, and down 9 1/2 cents in the March Minneapolis. The March U.S. dollar index is up 0.23 at 90.34. April gold is down $2.30 at $1,316.70 while March silver is down $0.10 and March copper is down 0.0425. The Dow Jones Industrial Average is up 132 at 23,992. March crude oil is down $2.11 at $59.04. March heating oil is down $0.0703, March RBOB gasoline is down $0.0732, and March natural gas is down $0.111.

For the week:

March corn closed up 1/2 cent and December closed down 1/4 cent. March soybeans were up 4 1/4 cents in the March while the November was up 1 cent. March Chicago wheat was up 2 1/4 cents, March Kansas City wheat was up 2 1/4 cents, and March Minneapolis wheat was down 1/4 cent.

Corn:

March corn dropped 3 3/4 cents to $3.62 Friday, but held a slight gain on the week, helped by dry weather in Argentina, increased U.S. export activity, and this week's news that U.S. ethanol exports were up 60% in December from a year ago. This week's trading started with bearish influence from investors fleeing a falling stock market on Monday and commodity prices got more of the same treatment on Friday after the Dow Jones Industrial Average fell over 1,000 points on Thursday. The corn market still has concerns about dry conditions in Argentina, but they eased on Friday with rain falling in central Argentina and ushering in a few days of milder temperatures. Fundamentally, Thursday's lower U.S. ending stocks estimate from USDA was slightly less bearish for corn, but it also depends on an optimistic export forecast that has yet to be proved. Technically, the trend in March corn still remains up with help from active domestic demand and rising cash prices. DTN's National Corn Index closed at $3.35 Thursday, priced 31 cents below the March contract and near its highest price in six months. In outside markets, the Dow Jones Industrial Average is trying to rebound early Friday afternoon, trading up 132 points while nearly all commodities were lower.

Soybeans:

March soybeans closed down 4 3/4 cents at $9.83 Friday with rain falling in central Argentina ushering in at least a few days of milder temperatures. March soybean meal, however, ended up $2.10 and posted a bold gain of $12.40 for the week. In the face of a week that saw bearish outside influence from falling stock prices and an increase in USDA's estimate of U.S. ending soybean stocks to 530 million bushels, March soybeans actually did well to close up 4 1/4 cents on the week. On the bullish side, the Buenos Aires Grain Exchange lowered its estimate of Argentina's soybean production late Thursday to 50.0 mmt (1.84 bb), which is less than USDA's new estimate of 54.0 mmt. On the bearish side, U.S. soybean shipments are still down 14% from a year ago, which means the U.S. ending stocks estimate has room to go higher in future WASDE reports. Technically, the trend in March soybeans remains broadly sideways while the trend in March soybean meal remains up. DTN's National Soybean Index closed at $9.19 Thursday, holding in its sideways range and priced 69 cents below the March contract.

Wheat:

March Chicago wheat fell 7 1/4 cents to $4.49 and March K.C. wheat fell 9 cents to $4.65 1/2, both pressured by commercial selling and slightly better chances for moisture in the seven-day forecast. No, the forecast is not expecting significant rain amounts in the southwestern U.S. Plains, but when we also consider this week's flight to safety, triggered by falling stock prices and K.C. wheat's new five-month high on Wednesday, profit-taking on a Friday doesn't seem so far-fetched. It also didn't help that USDA lowered wheat's export estimate by 25 million bushels and raised the estimate of U.S. ending wheat stocks to 1.009 billion bushels -- an obvious reminder of how plentiful old-crop supplies are. We still have a long way to go before we know much about the world's next wheat crops in 2018. In the meantime, the trend remains up in winter wheat, encouraged by dry winter conditions in the western U.S. Plains. DTN's National SRW index closed at $4.28 Thursday, priced 29 cents below the March contract and near its highest price in six months. DTN's National HRW index closed at $4.33, near its highest price in six months.

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

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Todd Hultman