DTN Before The Bell Grain Comments

Morning CME Globex Update:

Grains were off to a lower start Monday as droughts in Argentina and the southwestern U.S. Plains appear to be losing their bullish impact on prices. This week's forecast for the central U.S. remains mostly dry with warmer, more spring-like temperatures on the way. At 8 a.m. CDT, USDA said 10.0 million bushels (254,800 mt) of U.S. corn were sold to unknown destinations and another 4.2 million bushels (107,752 mt) were sold to Japan, both for 2017-18.

Other Markets:

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

Corn:

At 8 a.m. CDT, USDA said 10.0 million bushels (254,800 mt) of U.S. corn were sold to unknown destinations and another 4.2 million bushels (107,752 mt) were sold to Japan, both for 2017-18. May corn was down 2 1/4 cents earlier Monday, influenced by lower soybean and wheat prices, but still holding near its highest level in six months. The seven-day forecast remains mostly dry for Argentina's main crop areas with moderate showers expected in the northwestern part of the country. Here in the U.S., the central Plains will be mostly dry with warmer temperatures, but rain continues to hang around the southeastern Midwest and Delta region. CFTC's report of positions as of Mar. 6 (before Thursday's WASDE report) showed noncommercial traders turned even more bullish in corn, increasing net longs from 214,492 to 320,384, the most since June 2016. The new bearish risk for corn prices is that corn's fundamentals are not as bullish as traders now are, but so far, the trend remains up in May corn. DTN's National Corn Index closed at $3.53 Friday, priced 37 cents below the May contract and within a cent of its July high. There was 38 delivery intention for March corn early Monday and open interest stood at 2,686 contracts with expiration coming Wednesday. In outside markets, the March U.S. dollar index is up 0.03, holding roughly steady after Friday's bullish jobs report. Most other commodities are starting lower Monday.

Soybeans:

May soybeans were down 2 1/2 cents early Monday, extending Friday's 24 3/4 cent loss as concerns about Argentina's dry weather appear to be losing their bullish impact on prices. Argentina's weather will be mostly dry again this week with some rain expected in the northwestern region. Meanwhile, central Brazil will be drier this week, favorable for harvest and second crop corn planting. Friday's CFTC report showed noncommercials became more bullish in soybeans as of Mar. 6, increasing net longs from 155,357 to 194,877, the highest since July 2016. While the trend in May soybeans is still up, last week's sell-off presents a bearish concern that price momentum has turned bearish at a time when speculators are heavily net long. Fundamentally, Argentina's drought gave us a bullish surprise in early 2018, but supplies in the U.S. and Brazil are currently plentiful. DTN's National Soybean Index closed at $9.60 Friday, down from its highest price in over a year and priced 79 cents below the May contract. Early Monday, there were no delivery intentions for March contracts of soybeans, 9 for meal, and 15 for bean oil.

Wheat:

May Chicago wheat was down 4 3/4 cents and May K.C. wheat was down 5 3/4 cents early Monday, continuing to fall back from recent highs even though the seven-day forecast remains mostly dry for the central U.S. Plains. The extended forecast does expect some precipitation for the northern Plains while the southwestern Plains remains dry. Friday's CFTC report showed noncommercials in Chicago wheat turned bullish for the first time since August 2017, taking on a small position of 8,807 net longs. Commercials took advantage of spot Chicago wheat prices above $5.00 and let go of their net longs, also for the first time since August. We can't help but notice that over the past five years, the times when noncommercials turned bullish were short-lived and corresponded to highs in wheat prices. For now, the trends remain up in Chicago and K.C. wheat, but price momentum has turned bearish, more in line with the broader fundamentals for wheat. DTN's National SRW index closed at $4.54 Friday, down from its highest price in seven months and 35 cents below the May contract. Early Monday, there were no delivery intentions for March wheat and not many contracts left trading.

Todd Hultman can be reachedat todd.hultman@dtn.com

FollowTodd on Twitter @ToddHultman1

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