DTN Before The Bell Grain Comments

Soybeans Higher Early, Argentina Still Dry

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

Morning CME Globex Update:

March soybeans were quickly higher and March meal was up $8.70 early Tuesday, coming off a three-day weekend that was mostly dry again in Argentina. Corn and wheat were modestly higher with dry conditions also hanging on in the western U.S. Plains.

Other Markets:

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

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Corn:

March corn was up 1 1/2 cents early Tuesday, continuing to push gradually higher after Argentina experienced another weekend of mostly dry weather and has little moisture expected the next seven days. Here in the U.S., travel will be difficult in areas with moderate to heavy rain expected from eastern Texas to Michigan most of this week. Flood watches are posted over the same area and should relieve drought in Missouri and Illinois that showed up in last Thursday's Drought Monitor. Friday's CFTC data showed noncommercials more bullish in corn as of Feb. 13, increasing net longs from 48,070 to 133,972. There is plenty of corn stored away here in the U.S., but Argentina's dry weather is reducing the competition and giving both, cash and futures prices a better-than-expected lift early in 2018. So far, the trend remains up in cash corn. DTN's National Corn Index closed at $3.37 Friday, priced 31 cents below the March contract and at a new six-month high. In outside markets, most commodities are mixed even though the March U.S. dollar index is up 0.54 early, supported by ongoing concerns about rising interest rates.

Soybeans:

March soybeans were up 12 3/4 cents early Tuesday, a quick jump higher after Argentina experienced another weekend of mostly dry weather and faces more of the same the next seven days. Temperatures are not expected to be as hot as a couple weeks ago when they were consistently in the 90s, but the lack of moisture continues to take a toll on Argentina's crops while Brazil is harvesting a soybean crop not far in size from last year's record 114.1 mmt (4.2 bb). Friday's CFTC data showed noncommercials a little more bullish in soybeans as of Feb. 13, increasing net longs from 1,893 to 51,163. Even though March futures prices pushed above $10, commercials are still slightly net long, holding 1,026 contracts. Weather markets are notoriously volatile and the fundamental outlook for soybean prices is difficult to pinpoint now with lower yields expected in Argentina. Technically, the trends are up in March soybeans and soybean meal. DTN's National Soybean Index closed at $9.52 Friday, near its highest prices in six months and priced 70 cents below the March contract.

Wheat:

March Chicago wheat was up 3 1/4 cents and March K.C. wheat was up 1 1/2 cents, continuing to find support from dry weather conditions in the western U.S. Plains. Most of this week, heavy rain will fall from eastern Texas to Michigan, putting much of the SRW wheat region in the eastern Midwest at risk of flooding. The rain will also catch eastern Oklahoma and parts of central Texas, but go no further west where severe drought afflicts the area around the Texas Panhandle. Friday's CFTC data showed noncommercials less bearish in Chicago wheat on Feb. 13, dropping net shorts from 48,708 to 16,435. As they often do, commercials took advantage of prices near their highest level in three months and reduced net longs to 22,564. While drought remains a concern for HRW wheat in early 2018, the trends remain up in both, Chicago and K.C. wheat. DTN's National SRW index closed at $4.29 Friday, near its highest price in six months and priced 29 cents below the March contract.

Todd Hultmancan be reached at todd.hultman@dtn.com

FollowTodd on Twitter @ToddHultman1

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Todd Hultman