DTN Early Word Grains
Exciting Times Ahead
May corn was 2 cents higher, May soybeans were 7 cents higher, and July Kansas City (HRW) wheat was 6 cents higher.
CME Globex Recap:The overnight markets are once again pointing to an exciting Monday with soybean meal up nearly $5 per ton, soybeans up 7 cents, DJIA futures posting a triple-digit rally, and gold up double-digits. Meanwhile the U.S. dollar index is showing another solid sell-off.
OUTSIDE MARKETS:The Dow Jones Industrial Average closed 347.51 points (1.4%) higher at 25,309.99, the NASDAQ Composite gained 127.31 points (1.8%) to 7,337.39, and the S&P 500 rallied 43.34 points (1.6%) to 2,747.30 Friday. DJIA futures were 171 points higher early Monday morning. Asian markets closed higher with Japan's Nikkei 225 up 260.85 points (1.2%), Hong Kong's Hang Seng adding 231.43 points (0.7%), and China's Shanghai Composite up 40.55 points (1.2%). European markets were trading higher with London's FTSE 100 up 24.04 points (0.3%), Germany's DAX gaining 46.77 points (0.4%), and France's CAC 40 rallying 28.17 points (0.5%). The euro was 0.0047 higher at 1.2345 (no, I didn't make that series up) while the U.S. dollar index lost 0.33 to 89.55. March 30-year T-Bonds were 8/32 higher at 144'10 while April gold gained $10.50 to $1,340.80. Crude oil was $0.07 lower at $63.48 and Brent crude slipped $0.14 to $67.17. China's Dalian soybean and Malaysian palm oil futures were both higher again overnight.
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| BULL | BEAR | ||
| 1) | If soybean meal and soybeans want to go up Monday, corn looks willing to follow. | 1) | Export demand for U.S. corn continues to run behind the 4-year pace. |
| 2) | It didn't rain over much of Argentina's key growing areas over the weekend, sparking solid buying in both soybean meal and soybeans. | 2) | As with corn, export demand for U.S. soybean supplies is running slower than expected so far this marketing year. |
| 3) | A weaker U.S. dollar and continued concern over new-crop crop conditions is supporting winter wheat. | 3) | July KC wheat posted a lower weekly close last Friday, establishing a bearish outside range on its weekly chart. |
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MORE COMMODITY-SPECIFIC COMMENTSCORN With the March contract set to go into delivery later this week, attention now turns to the May. There we see the contract set to test the recent high of $3.78 on its daily chart, though already overbought, on support from both commercial and noncommercial traders. Commercial activity is indicated by the uptrend in the May-to-July futures spread (weakening carry), reflecting growing concern over Brazil's second corn crop due to too much rain. Meanwhile, as last Friday's weekly update showed, total marketing year shipments continue to run behind the 4-year average. Using 4-year average percent shipped (of what turns out to be the marketing year total), corn's 649 mb (through Feb 15) projects to total export demand of 1.8 bb. USDA's latest estimate was 2.05 bb. National average basis firmed by about a penny last week, with Friday's DTN National Corn Index coming in at $3.36 3/4, putting basis at 29 1/2 cents under the March and 45 1/2 cents under the July.
SOYBEANS It didn't rain in key growing areas of Argentina over the weekend, leading to higher overnight trade in both soybean meal and soybeans. May meal was up more than $5 (per ton), helping rally May soybeans 7 cents. With the March contract moving into delivery later this week, the focus is now on May and its weakening carry to the July contract. This upturn in the futures spread reflects a growing concern that Argentina's crop could be closer to 50 mmt, as opposed to the 54 mmt in USDA's latest WASDE report. On the other hand, there has been talk that Brazil's crop could be closer to 116 mmt rather than USDA's latest estimate of 112 mmt. Continued rains in Brazil seem to have dampened the latter though. U.S. export shipments of 1.357 bb (through Feb. 15) are running behind the 4-year average of 1.430 bb, projecting total export demand of 1.81 bb. USDA's latest demand estimate was lowered to 2.1 bb.
WHEAT Winter wheat contracts were showing solid gains early Monday morning, supported by spillover buying from both soybeans and corn. It will be interesting to watch activity in new-crop July KC wheat (HRW) this week, after posting a bearish technical signal on its weekly chart last week. The weaker U.S. dollar seems to be trumping technicals, at least early Monday morning, helping the wheat complex to rally. Fundamentally there is little change in new-crop winter wheat, with the crop one week closer to breaking dormancy and giving better indications of its actual condition. For now, at least across much of the U.S. Southern Plains growing area, the HRW crop looks to be in poor shape.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.37 | $0.00 | -$0.29 | Mar | $0.005 |
| Soybeans: | $9.67 | $0.04 | -$0.70 | Mar | -$0.003 |
| SRW Wheat: | $4.25 | $0.01 | -$0.28 | Mar | $0.001 |
| HRW Wheat: | $4.28 | -$0.02 | -$0.41 | Mar | $0.000 |
| HRS Wheat: | $5.87 | -$0.02 | -$0.14 | Mar | $0.006 |
Darin Newsom can be reached at darin.newsom@dtn.com
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