DTN Before The Bell Grain Comments

Weather Concerns Push Grains Higher

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

Morning CME Globex Update:

At 8 a.m. CST, USDA announced 4.5 million bushels (115,000 mt) of U.S. corn were sold to Egypt for 2017-18. 3.9 million bushels (106,000 mt) of U.S. soybeans were sold to unknown, 1.5 million bushels of which were for 2017-18. May contracts of corn, soybeans and all three wheats were higher early Friday, continuing to find support from weather concerns in Argentina and the U.S. USDA's weekly export sales report showed net cancellations for soybeans, tracing to China.

Other Markets:

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

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Corn:

At 8 a.m. CST, USDA announced 4.5 million bushels (115,000 mt) of U.S. corn were sold to Egypt for 2017-18. May corn was up 1 1/4 cents earlier Friday, not moving much the past ten days, but staying near its highest prices in four months with ongoing support from dry conditions in Argentina. Friday's seven-day outlook remains dry for Argentina and southern Brazil while the better rain chances favor central Brazil where soybeans are being harvested and a second corn crop is being planted. So far in 2017-18, U.S. corn exports have been struggling and early Friday, USDA said last week's export sales and shipments of corn totaled 61.2 and 33.5 million bushels respectively, another bearish combination for the week that has total exports down 29% in 2017-18 from a year ago. Also not helping the movement of grain, this week's rain has caused flooding along the Ohio River and is preventing shipping stations from being able to load grain. Fundamentally, the overall outlook for corn remains bearish, but here in the off-season while corn is stored away, the trend in May corn remains up. DTN's National Corn Index closed at $3.37 Thursday, 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 0.12 with commodities mixed outside of grains.

Soybeans:

At 8 a.m. CST, USDA announced 3.9 million bushels (106,000 mt) of U.S. soybeans were sold to unknown, 1.5 million bushels of which were for 2017-18. May soybeans were up 3 3/4 cents earlier with May meal up $1.40 and bean oil up 0.19. Even more than corn, soybeans and soybean meal continue to find support from Argentina's dry situation and so far, the seven-day forecast expects more of the same. We can't forget that Brazil continues to harvest what is expected to be a 4.1 billion bushel soybean crop, but so far, May soybean prices trading at their highest prices since July are showing no concern for either Brazil's harvest or the slow U.S. export pace. Early Friday, USDA said last week saw a net reduction of 4.0 million bushels of export sales while shipments totaled 32.8 million bushels. It was obviously a bearish showing for the week after China showed reductions of 12.1 million bushels and total soybean shipments remained down 13% in 2017-18 from a year ago. In spite of several bearish fundamental concerns, the trends remain up in both May soybeans and soybean meal with new-crop spreads showing bullish inverses. DTN's National Soybean Index closed at $9.63 Thursday, at its highest prices in seven months and priced 69 cents below the March contract.

Wheat:

May Chicago wheat was up 4 cents early Friday, finding reluctant support for SRW wheat prices from this week's rains and flooding problems through Arkansas and along the Ohio River with more heavy amounts expected the next seven days. Meanwhile, May K.C. wheat was also up 4 cents while the forecast for the western Plains remains mostly dry. It is unusual for wheat prices to be trading on weather concerns this early in the year, but the southwestern drought and now, heavy rains in the southeastern Midwest are giving 2018 an unusual start. Early Friday, USDA said last week's export sales and shipments of wheat totaled 12.1 and 15.4 million bushels respectively, still not enough to make a significant dent is U.S. wheat supplies. Against a bearish fundamental backdrop of plentiful global supplies, the current trends in winter wheat remain up with ongoing support from this winter's weather concerns. DTN's National SRW index closed at $4.24 Thursday, 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

FollowTodd on Twitter @ToddHultman1

(KR)

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Todd Hultman