DTN Before The Bell Grain Comments

Grains Push Higher Early Tuesday

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

Morning CME Globex Update:

May contracts of corn, soybeans, and all three wheats were higher early Tuesday, pushing back after last week's drop in soybean and wheat prices. At 8 a.m. CDT, USDA announced 8.3 million bushels (210,000 mt) of optional-origin corn were sold to South Korea for 2017-18.

Other Markets:

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

Corn:

May corn was up 1 1/4 cents early Tuesday, staying near its highest prices in six months with ongoing support from Argentina's dry weather and the anticipation of higher exports after Thursday's WASDE report. The seven-day forecast remains mostly dry for Argentina with moderate showers expected in the northeastern part of the country and on the southern tip of Brazil. Export activity has also picked up slightly for corn lately, but meeting USDA's new 2.225 billion bushel estimate is still an aggressive goal (see Tuesday's DTN article, "Grains' Blessings and Curses"). Fundamentally, Argentina's drought has been a bullish surprise early in 2018 and will help to reduce corn's big ending stocks estimates, but unless the U.S. runs into weather problems, the outlook remains bearish. Technically, the trend in May corn remains up, in line with its seasonal tendency. DTN's National Corn Index closed at $3.53 Monday, priced 37 cents below the May contract and within a cent of its July high. There were 441 delivery intentions for March corn early Tuesday and open interest stood at 1,829 contracts with expiration coming early Wednesday. In outside markets, the March U.S. dollar index is down 0.15 after Tuesday's report from the U.S. Labor Department showed consumer prices up 2.2% from a year ago, as expected.

Soybeans:

May soybeans were up 6 1/4 cents early Tuesday and May meal was up $3.40, benefiting from early noncommercial buying and another mostly dry seven-day forecast for Argentina. Tuesday's satellite map shows some rain activity across Mato Grosso, but the soybean harvest remains close to its usual pace. Late Monday, private consultant Safras & Mercado estimated Brazil's soybean crop at 117.3 mmt (4.3 bb), a vote of dissent against the 113.0 mmt (4.2 bb) estimate put out by both, USDA and Brazil's government. Fundamentally, the U.S. has been well-supplied in soybeans since last fall's record harvest and U.S. exports are dragging, down 13% from a year ago. Argentina's drought has helped revive noncommercial interest in owning soybeans and U.S. crush activity has picked up in the U.S., but it is difficult to say how high prices can go on just Argentina, especially if the U.S. plants 90 million acres or more this spring. Technically, the trends remain up in May soybeans and meal, but upward momentum turned lower last week -- a possible bearish warning. The National Oilseed Processors Association will have its next monthly crush report on Thursday. DTN's National Soybean Index closed at $9.62 Monday, down from its highest price in over a year and priced 79 cents below the May contract. Early Tuesday, there were no delivery intentions for March contracts of soybeans, 4 for meal, and 4 for bean oil.

Wheat:

May Chicago wheat was up 3 1/4 cents and May K.C. wheat was up 4 1/2 cents early Tuesday, finding some commercial support again after last week's drop while the seven-day forecast remains mostly dry for the southwestern U.S. Plains. A rainy weekend is expected for Nebraska, Missouri, and the lower Mississippi River, but western Kansas and the Texas Panhandle remain in extreme drought after five months of no significant precipitation. May Minneapolis wheat is also trading higher, up 3 3/4 cents with early commercial buying. Fundamentally, 2018 remains a difficult year for U.S. wheat exports while U.S. prices are higher and international supplies are plentiful. Technically however, the trends remain up in Chicago and K.C. wheat with no relief in sight yet for the southwestern U.S. Plains. DTN's National SRW index closed at $4.55 Monday, down from its highest price in seven months and 35 cents below the May contract. Early Tuesday, there were 9 delivery intentions for March Chicago wheat, 3 for March K.C. wheat, and 4 for March Minneapolis wheat. Not many contracts are still trading.

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

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Todd Hultman