DTN Closing Grain Comments

General Comments:

March corn settled up 4 cents per bushel, while July corn was up 4 3/4. January soybeans closed up 11, with July up 10 1/4 cents. Chicago March wheat was up 5 1/2 cents, Kansas City March up 6 1/4, and Minneapolis March wheat was 6 cents higher. The December U.S. dollar index is down .006 at 97.04. February gold is up $10.6 at $136.60. March silver was up .253 at $14.475. The Dow Jones Industrial average is up 256 points at 25,596. January crude oil is up $2.07 per barrel at $53.01. January RBOB is 1.4330, up .0327. January heating oil is up .0607 at $1.89.

Corn:

March corn gapped higher in the overnight in response to the U.S.-China trade agreement in Argentina, which suggested no increased tariffs for at least 90 days, and an indication from China that they would buy unspecified but very significant quantities of U.S. ag, energy, industrial and other products. That suggested some hope for corn bulls that China might indeed ramp up its buying of U.S. pork, ethanol or DDGs. Export inspections, though slightly under last week's large number, were bullishly construed, as shipments at this point remain some 80% above year ago levels, and much larger than USDA had projected. The trade would still like to see a drop of the 25% import duty on corn, milo and soybeans in China, and some concrete evidence of China's pledge to buy, especially U.S. soybeans. Funds, who are modestly net short corn with options, began to cover some shorts Monday. While weather is mostly beneficial in much of South America, any corn remaining in the fields in the U.S. Midwest will be tough to pick up following weekend snows. DTN's National Corn Index settled at $3.38 Monday and is 40 cents below the March contract.

Soybeans:

The euphoria from the weekend G-20 meeting between the U.S. and China -- which could be termed a very positive, but middle-of-the-road agreement on the ongoing trade battle -- sent soybeans and products up fast in the overnight trade. Beans gapped higher, and finished fairly strong, although made a new low just before the close. The 90-day truce on added tariffs moved the final conclusion down the road, as U.S and China officials try to work out agreements on many non-ag issues as well. With the commodity funds holding a fairly significant net-short (futures and options combined) soybean and soybean oil position, they were forced to cover some of those shorts. The China promise of buying "unspecified but very significant" quantities of U.S. soybeans and other products was music to farmer's ears, but until we see some concrete evidence of sales, the markets may not accelerate. Export inspections were decent Monday, but total shipments remain 32% under year ago levels, and some 353 million bushels behind last year. January soybeans broke out of the well-advertised triangle chart pattern, but we often see a retest of the breakout area, so a move back to $8.96 to $9.00 is not out of the question before strength resumes. DTN's National soybean Index closed at $8.07 Monday and is $0.87 below the January contract.

Wheat:

Although wheat is not directly involved in the U.S-China trade dispute, it also gapped higher in last night's risk-on environment. Wheat also was propelled by the ongoing Ukraine-Russia dispute; in addition to blockades of some shipping paths, Russia's placement of some 80,000 troops on the Ukraine border threatened to interrupt Ukraine wheat shipments. Ukraine has been a solid competitor for U.S. wheat exports, so the ongoing dispute promises the potential for a pick-up in U.S sales. Kansas City futures closed strong on Friday on the heels of this dispute in addition to zero wheat deliveries in Chicago or Kansas City. That all changed on Monday, as a commercial interest delivered 400 contracts of hard wheat, pressuring KC December to a lower close. The Kansas City March was able to close strong in spite of that. Export inspections were above last week, but remain well below last year's shipment pace. DTN's National HRW Index closed at $4.62 Monday, and that is an average basis of 44 under Kansas City March futures. .

Dana Mantini can be reached at dana.mantini@dtn.com

Follow him on Twitter @mantini_r

(CZ)

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