DTN Early Word Grains
Choppy Markets as Chinese Waiting Game Continues
March corn was unchanged, January soybeans were up 1/2 cent, and March KC wheat was down 1/4 cent.
CME Globex Recap:Global equity markets are mostly higher overnight as stabilizing trade takes over following the weakness the last week. Markets were encouraged Monday night on news a phone call between Treasury Secretary Mnuchin, U.S. Trade Representative Robert Lighthizer and Chinese Vice Premium Liu He took place to restart trade negotiations. Media outlets reported the three senior officials discussed Chinese purchases of agriculture products and changes to fundamental Chinese economic policies. Grain markets are in a holding pattern until USDA releases data at 11:00am CST.
OUTSIDE MARKETS:Monday closes showed the Dow Jones Industrial Average up 34.31 at 24,423.26, the S&P 500 up 4.64 at 2,637.72, while the 10-yr Treasury yield ended at 2.85%. Early Tuesday, DJIA futures are up 76.00. Asian markets were mixed with Japan's Nikkei 225 down 71.48 points (-0.34%) and China's Shanghai Composite was up 9.51 points (0.37%). European markets are higher with London's FTSE 100 up 63.48 points (0.94%), Germany's DAX up 142.51 points (1.34%), and France's CAC 40 up 67.75 points (1.43%). The euro was up 0.00265 at 1.13850 and the U.S. dollar index was down 0.2340 at 96.9580. December 30-year T-Bonds were down 12/32nds while February gold was up $4.40 at $1253.80 and January crude oil was $0.33 at $51.33. Soybeans on China's Dalian Exchange closed up 0.09% and soymeal closed up 0.55%.
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| 1) | Improved export demand as evidenced on the weekly export sales report and the daily sales announcement Friday is supportive to wheat futures. | 1) | All board crush spreads through October 2019 are now below 90 cents per bushel with spot crush at 12-month lows. |
| 2) | Exports of corn, ethanol and DDGs are all running ahead of the same pace a year ago, supporting higher futures prices year/year. | 2) | Media outlets continue to report rumors of China getting ready to buy 5-8 million metric tons (mmt) of soybeans, but no purchases have been confirmed. |
| 3) | The DTN National Basis Index for corn is sitting just below the strongest levels since early July as bushels get more difficult to buy into winter. | 3) | USDA reported 401.1 million bushels of corn under loan last week, the largest total for this week since 2010. |
CORN Quietly mixed corn prices Tuesday morning as prices chop awaiting fresh data tables from the USDA. News is incredibly light as all traders await movement on the trade front. The December WASDE will be released later Tuesday morning, but market moving data points are expected to be light. The average trade estimate for U.S. corn ending stocks sees USDA leaving things unchanged this month. Global corn ending stocks are also expected to remain unchanged, setting the stage for a real barn-burner of a report. The commitments of traders data was delayed until Monday afternoon but showed large specs buying 63,584 contracts to cut their net short position to 14,077 contracts. Commercials added around 85,000 contracts to their net short, mainly through cuts to the gross commercial long. March corn continues to respect the gap left from the Sunday open on 12/3 but momentum will wane if new highs are not made soon.
SOYBEANS Soybeans are posting small gains Tuesday morning but remain well inside the range of the last six sessions. It doesn't feel as though the soybean market is in a hurry to go in either direction until the rumored Chinese purchases are either confirmed or denied. U.S. ending stocks of soybeans are expected to drop by 10 million bushels on Tuesday's WASDE report, presumably from higher crush demand. Global ending stocks are expected to uptick only slightly with a generally quiet report expected before South American growing season weather really gets important. Big buying seen by large specs in soybeans last week as they purchased 47,342 contracts to cut their net short to 64,027 contracts. Conversely, commercial traders flipped from a small net long to a sizable net short at 45,940 contracts. Weekly export inspections came in at 33.9 million bushels (mbu) vs. the 34.5mbu needed weekly to hit the USDA export forecast. Total inspections are down 41.2% from a year ago. Worth noting in the inspection details, there were 31,500 bushels of soybeans inspected for China last week, presumably in containers.
WHEAT Mixed wheat markets Tuesday morning with Chicago and Kansas City slightly weaker and Minneapolis a tick firmer, although Minneapolis and Chicago remain inside of Friday's range. Kansas City wheat made new highs on Monday but reversed to close lower. More than anything, it was encouraging to see Friday's gains mostly retained as the U.S. enjoys its long-awaited export demand. Cash markets were very quiet to start the week with the domestic markets for both spring and winter slightly weaker. Minneapolis/Kansas City inter-market spreads have been correcting sharply the last two weeks with the March contract trading down to the lowest level since early November at +64.75 cents. On a cash basis, 13.0% protein HRW is trading a five-cent premium to 13.5% protein HRS on a delivered Chicago basis. On the COT report, funds bought 5,252 contracts of Kansas City wheat to leave them net short 10,836 contracts. In Chicago, funds bought 13,385 contracts to cut their net short to 56,644 contracts. In Minneapolis, funds bought 172 contracts to leave them net short 6,272 contracts. U.S. wheat ending stocks are expected to rise by 12 million bushels on today's WASDE report with exports the likely culprit. We would argue because of the recent pickup in business, ending stocks are more likely to remain unchanged until the January WASDE can incorporate December 1 stocks data.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.48 | -$0.01 | -$0.36 | Mar | $0.007 |
| Soybeans: | $8.22 | -$0.07 | -$0.88 | Jan | -$0.002 |
| SRW Wheat: | $4.93 | -$0.05 | -$0.32 | Mar | $0.005 |
| HRW Wheat: | $4.78 | -$0.01 | -$0.32 | Mar | $0.005 |
| HRS Wheat: | $5.41 | -$0.05 | -$0.34 | Mar | $0.011 |
Tregg Cronin can be reached at tmcronin31@gmail.com
Tregg can be followed throughout the day on Twitter @5thWave_tcronin
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