DTN Before The Bell Grain Comments

Morning CME Globex Update:

The U.S. Dollar Index continues to churn higher this week, which is traditionally bearish to grains, as is a falling crude oil market. Grain and oilseed futures prices are mixed, showing a fight between trend-followers and profit-takers Thursday morning.

Other Markets:

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

Corn:

Thursday's weekly export sales report, showing 1.753 million metric tons of corn sold for the 2017/18 marketing year, wasn't enough to spur the corn futures market out of the lightly lower prices where it spent most of the morning. New crop December corn futures remain slightly above $4.00 per bushel. The overall grain futures sector may struggle to continue higher through the day amid pressure from a strengthening U.S. dollar this week, a lower correction in the stock market, and widespread commodity losses, including those seen on the crude oil and ethanol futures charts after a bearish U.S. crude oil inventory report. The DTN National Corn Index, an average of cash bids around the country, was $3.45 Wednesday, showing the national average basis level at 37 cents under the May futures contract. Expiring March grain contracts are now subject to delivery, and the CBOT reports there were 25 March corn contracts issued and stopped in the past trading session.

Soybeans:

Soybean meal futures are lower Thursday morning, pulling back slightly after a month-long rally, although soybean futures themselves are independently moving higher, anyway. The weekly export sales report showed 857,900 metric tons sold for the 2017/18 marketing year, which was an improvement on a week-over-week basis and over the previous 4-week average. Watch for volatility in local basis bids on the barge market during this predicted episode of flash flooding in the Mississippi Delta. But for now, basis bids remained mostly stable Wednesday as a nationwide average, at 79 cents under the May futures contract, with the DTN National Soybean Index at $9.76. In the daily deliveries report, there were 101 March soybean contracts, 150 March soybean meal contracts, and 1,610 March soybean oil contracts issued and stopped. At 8:00 a.m., USDA announced 120,000mt of soybeans sold to China and 126,000mt of soybeans sold to unknown destinations, both sales with half for 2017-2018 delivery and half for 2018-2019 delivery.

Wheat:

The latest U.S. Drought Monitor released Thursday morning shows a slight improvement and may trigger a pullback in the recent wheat rally, which took the July KC wheat futures contract 16 1/2 cents higher on Wednesday. Areas in any kind of drought fell by 13.0 percentage points in the South and 2.6 percentage points in the High Plains during the last week of February, although the most concerning D3 areas haven't shrunk. Ordinarily, it would be considered alarmist to get bullish about wheat prices based on any drought map when it's still technically winter. However, keep in mind that not only will winter wheat fields be coming out of dormancy this month, but spring wheat fields will start to be prepped for planting, and this drought extends all across the North American wheat-growing regions, from Edmonton, Alberta to Edmond, Oklahoma and beyond. Weekly export sales were disappointing at 191,100 metric tons, with considerable amounts of switching and reductions. Old crop Hard Red Winter wheat's cash bids averaged $4.69 Wednesday, or 53 cents under the May KC contract. The SRW Index was $4.58 or 37 cents under the May Chicago contract. Greater strength of demand is seen for Hard Red Spring wheat, with its cash index at $5.99 and average basis at 23 cents under the May Minneapolis contract. Daily deliveries showed 134 March KC wheat contracts, 600 March MGEX contracts, and 0 March Chicago wheat contracts.

Elaine Kub can be reachedatelaine@masteringthegrainmarkets.com

FollowElaine on Twitter @elainekub

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