DTN Early Word Grains

Commodities Start Red as a Valentine

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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6:00 a.m. CME Globex:

March corn was 1 3/4 cents lower, March soybeans were 2 3/4 cents lower, and July Kansas City (HRW) wheat was 4 cents lower.

CME Globex Recap:

It looks like Cupid was busy shooting arrows overnight as much of Wednesday morning's commodity board is painted as red as a Valentine. On the financial side, stocks are poised for a modestly higher start to the day while the U.S. dollar is slightly lower. Seven-day forecasts remain mostly dry for Argentina and the western U.S. Plains.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 39.18 points (0.2%) higher at 24,640.45, the NASDAQ Composite gained 31.55 points (0.4%) to 7,013.51, and the S&P 500 was up 6.94 points (0.3%) to 2,662.94 Tuesday. DJIA futures were 133 points higher early Wednesday morning. Asian markets were mixed with Japan's Nikkei 225 down 90.51 points (-0.4%), Hong Kong's Hang Seng up 676.07 points (2.3%), and China's Shanghai Composite up 14.20 points (0.4%). European markets were trading mostly higher with London's FTSE 100 up 38.91 points (0.5%), Germany's DAX up 83.40 points (0.7%), and France's CAC 40 up 30.57 points (0.6%). The euro was 0.0001 higher at 1.2381 while the U.S. dollar index was down 0.07 at 89.67. March 30-year T-Bonds were 3/32 higher at 144'21 while April gold gained $3.50 to $1,334.00. Crude oil was $0.47 lower at $58.72 and Brent crude was down $0.30 to $62.42. China's Dalian soybean futures were slightly higher and Malaysian palm oil futures was down 0.5% overnight.

BULL BEAR
1) Corn continues to find support from Argentina's dry weather conditions. 1) Corn supplies in storage remain plentiful and cash prices are near their highest offers in six months.
2) Old-crop soybeans closed at a new two-month high on Tuesday, joining the uptrend already in progress in soybean meal. 2) New-crop soybeans near their highest prices in a year reflect bullish concerns, but could also be enticing for hedging activity.
3) Little weather relief is in sight for the U.S. Southern Plains HRW growing area. 3) New-crop July Kansas City wheat trading above $5 no longer has the short-covering potential that it once did.

The weekly Newsom on the Market column can be found on subscription sites only. On DTN Pro it is in News/Town Hall and on MyDTN in News/Columns.

MORE COMMODITY-SPECIFIC COMMENTS

CORN March corn is down 1 3/4 cents early, finding resistance at the February high of $3.68 1/2 even though conditions in Argentina are dry again on Wednesday and in the seven-day forecast. One of the dangers of following corn in the winter is that prices can spend a lot of time not doing much of anything so it's important to not be distracted by micro-moves here and there. In the big picture, there is plenty of corn in storage, but cash corn prices have once again taken advantage of their seasonal uptrend to move up from their harvest lows. With DTN's National Corn Index at $3.36, cash prices don't seem very tempting for farmer selling yet, but new-crop December futures prices near $3.94 may offer a hedging opportunity for some. For now, the trend in March corn remains up with seasonal highs typically seen around late-May.

SOYBEANS March soybeans are down 2 3/4 cents early Wednesday, taking a break after Tuesday's new two-month high even though the seven-day forecast remains mostly dry for Argentina. In spite of the market's latest obsession with Argentina's weather, we have to also remember that while Argentina is the world's largest exporter of soybean meal, Brazil is the world's largest exporter of soybeans and USDA estimates Brazil is harvesting a 4.1 billion bushel (112.0 mmt) crop. Market factors are fundamentally confusing, but technically speaking, Tuesday's new two-month high turned the trend higher in March soybeans.

WHEAT New-crop July Kansas City wheat is down 4 cents early, finding it difficult to take prices higher even though the seven-day forecast remains mostly dry for the western U.S. Plains. Wednesday's March U.S. dollar is slightly lower, staying near its lowest prices in three years, which is somewhat helpful to U.S. wheat exports. However, we can't say U.S. wheat shipments in 2017-18 have much to brag about, running 5% lower than last year's slow pace. Dry winter conditions have given winter wheat prices a decent boost from their December lows and it seems likely that the 2018 wheat crop will be negatively impacted by this dry trend. However, it is also good to keep in mind that it is still too early to know much about the next winter wheat crop and last year's U.S. wheat production was only 6% of the world's total. For now, the trends remain up in winter wheat.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.36 -$0.01 -$0.31 Mar -$0.004
Soybeans: $9.43 $0.10 -$0.69 Mar $0.000
SRW Wheat: $4.32 -$0.03 -$0.29 Mar $0.006
HRW Wheat: $4.33 -$0.02 -$0.41 Mar $0.005
HRS Wheat: $5.85 -$0.08 -$0.16 Mar $0.001

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

Toddcan be followed throughout the day on Twitter @ToddHultman1

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Todd Hultman