DTN Before The Bell Grain Comments

Grains Quiet Early, U.S. Dollar Stays Firm

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

Morning CME Globex Update:

At the morning break, row crops were a little higher and winter wheat was mixed, prepared for a quiet news day with flooding concerns in the southeastern Midwest getting some attention. The March U.S. dollar index is starting higher, supported by ongoing concerns of higher interest rates ahead.

Other Markets:

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

Corn:

March corn was up 1 3/4 cents early Wednesday, staying near the high end of its three-month range with ongoing support from Argentina's dry crop conditions and mostly dry seven-day forecast. Here in the U.S., heavy precipitation from eastern Texas up to Michigan is expected to continue the next few days and is raising flood concerns from eastern Texas to western Kentucky. Meanwhile, the western U.S. Plains stays mostly dry. The fundamental problem for corn prices is that unless there is a significant weather problem in 2018, we're going to see an even larger surplus in 2018-19. For now, the trend remains up in March corn with help from Argentina. DTN's National Corn Index closed at $3.35 Tuesday, priced 30 cents below the March contract and down from its highest price in six months. In outside markets, the March U.S. dollar index is up 0.18 with most other commodities starting lower. Minutes from the Federal Reserve's latest meeting will be released at 1 p.m. CST.

Soybeans:

March soybeans were up a half-cent early, staying near their highest prices in six months while the seven-day forecast for Argentina remains dry. Meanwhile, Brazil's harvest continues to make progress in spite of some disruption from occasional rain across central Brazil and there is more in the seven-day forecast. Given the confusing mix of Brazil's bearish situation versus Argentina's more bullish situation, it is understandable if traders feel lost after turning modestly bullish last week. Soybean producers need to consider making some forward sales as these higher soybean prices in February are also likely to entice more U.S. soybean acres this spring. For now, the trend remains up in March soybeans while U.S. soybean exports continue to drag. DTN's National Soybean Index closed at $9.56 Tuesday, at its highest prices in seven months and priced 70 cents below the March contract.

Wheat:

March Chicago wheat was up a quarter-cent early, pressured by a higher U.S. dollar index and by traders having second thoughts after last week's prices hit their highest level in four months. The concern for crops early in 2018 has been drought in the western U.S. Plains and that continues with another dry seven-day forecast on Wednesday. This week, we also have to wonder about flooding concerns for the SRW wheat crops in the southeastern Midwest as at least three days of heavy rain are expected to create problems from eastern Texas to western Kentucky. It is important to keep in mind that U.S. wheat production only accounted for 6% of world production in 2017 and it is still very early in 2018. For now, winter wheat prices are able to get away with a higher trend, helped by these early winter concerns. DTN's National SRW index closed at $4.21 Tuesday, down from its highest price in six months and priced 28 cents below the March contract.

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

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Todd Hultman