DTN Before The Bell Grain Comments

Morning CME Globex Update:

The U.S. Dollar Index is higher Wednesday morning amid the expectation for rising interest rates, a prospect which was strengthened by the monthly inflation data just released. In response, grains, oilseeds, and most other commodity futures markets are in red territory on the morning of Valentine's Day.

Other Markets:

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

Corn:

Stock market volatility may continue to ripple through the broader investment markets Wednesday, making any direction possible for corn prices, which have been trending upward but which started the morning lightly lower. Inflation in the United States remained stable since last month, showing a 2.1 percent rise in the all-items index during the twelve months leading up to January. However, this was a slightly higher number than many stock traders were anticipating, and could potentially trigger another round of spooked liquidation. It has already triggered higher movement in the U.S. Dollar Index. So far, nearby corn futures have risen 4.2 percent during this calendar year with all its outside market volatility, and any additional outside panic could continue to be positive to corn prices if speculators resume their short-covering activity. The average price for new crop December corn futures during February trading sessions has so far calculated out to $3.94, and the average price for new crop November soybean futures has come to $10.06, or 2.5 times the price of corn. Meanwhile in the old crop cash market, the DTN National Corn Index, an average of cash bids around the country, was $3.36 Tuesday, showing the national average basis level remains at 31 cents under the March futures contract. USDA announced123,000 mt of corn were sold to Unknown for delivery in 2017-2018.

Soybeans:

Nearby soybean meal futures have been wildly surging this week, reaching above $370 per ton on Tuesday, but overnight trade suggested a calmer correction is likely during Wednesday's session. Traders may feel the concern about Argentina's dry weather and that country's capacity to export soybean meal is finally priced in to the market after seeing 18 percent gains in soybean meal futures and 6.4 percent gains in soybean futures since the start of the calendar year. The Lunar New Year holiday in China will begin this Friday and last a full week, so the next two trading sessions represent the last opportunity to see much export business from them in the near future. The DTN National Soybean Index came in at $9.43 Tuesday afternoon, showing the average U.S. cash bid remained at 69 cents under the March futures contract.

Wheat:

Minneapolis spring wheat futures toyed with some higher trade overnight, but it may be difficult for this market to find much bullish interest while the rest of the commodity sector experiences a downward day and its own chart remains devoid of any compelling direction. Losses of a few cents in the July KC contract, representing new crop Hard Red Winter wheat, still show that market supported above $5 per bushel, reflecting the bullish concern about persistent drought in the U.S. Southern Plains and the region's dry long-term forecast for this spring. Meanwhile, old crop Hard Red Winter wheat's cash bids averaged $4.33 Tuesday, or 41 cents under the March KC contract. The SRW Index was $4.32 or 29 cents under the March Chicago contract. The DTN Spring Wheat Index was $5.85 or 16 cents under the March Minneapolis contract.

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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