DTN Closing Grain Comments

Wheat Prices Turn Lower on Slow Day

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN illustration by Nick Scalise)

General Comments:

March corn was up 1 1/2 cents and December 2019 corn was up 1 1/2 cents. January soybeans were up 3 cents and November 2019 soybeans were up 2 3/4 cents. March K.C. wheat closed down 4 3/4 cents, March Chicago wheat was down 2 1/2 cents, and March Minneapolis wheat was down 9 1/4 cents. The March U.S. dollar index is down 0.05 at 96.49. February gold is up $1.60 at $1,253.40 while March silver is down 6 cents and March copper is down $0.0945. The Dow Jones Industrial Average is up 167 points at 23,760. February crude oil is down $2.80 at $47.80. February heating oil is down $0.0532 while February RBOB gasoline is down $0.0486 and February natural gas is up 0.208.

Corn:

March corn ended up 1 1/2 cents at $3.85 1/2 Tuesday, still staying within the same narrow, sideways range we have seen in December. The good news for corn producers is cash corn prices remain near their highest level in six months, while recent export activity has been moderate. Crop conditions in South America lean favorable for most areas, but south-central Brazil has been hot and dry lately. This week's forecast has chances for rain in southern Brazil and northern Argentina. Heavy amounts in northern Argentina present a risk of local flooding. Otherwise, this tends to be a quiet time of year for trading in grains, especially with Christmas less than a week away. Prices are going nowhere fast, but one bullish factor for corn comes from Brazil where the FOB price is trading at $4.69 a bushel, the highest in six months. Here in the U.S., the trend of cash corn prices remains up. DTN's National Corn Index closed at $3.49 Friday, near its highest prices in six months and 35 cents below the March contract. In outside markets, the March U.S. dollar index is down 0.05, while the 10-year T-note yields 2.83%, its lowest rate since August. The Federal Reserve is expected to increase the federal funds rate by a quarter-percent on Wednesday.

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Soybeans:

January soybeans closed up 3 cents at $9.07 3/4 Tuesday with traders still hoping for more purchases by China, even though USDA had no daily export news on either Monday or Tuesday. January soybean prices are up over 80 cents from the September low and are currently finding resistance at the old July high of $9.32 3/4, while the U.S. and China keep working at resolving trade differences. It seems unlikely these trade differences will find an easy solution, but it is reasonable for China to make some purchases -- at least enough to get them to Brazil's impending harvest. Fundamentally, there remains a big elephant in the room -- the possibility of a billion bushels or more of U.S. ending soybean stocks by the time we get to the end of 2018-19. Part of U.S. demand will depend on the success of Brazil's crop and south-central Brazil has been challenged lately by hot and dry weather. For now, the trend in U.S. cash soybeans remains up, helped by modest basis improvement in the context of heavy supplies and a high-risk trade environment. DTN's National Soybean Index closed at $8.19 Friday, down from its highest level in four months and $0.86 below the January contract.

Wheat:

March K.C. wheat closed down 4 3/4 cents at $5.17 1/4 Tuesday and it shouldn't surprise anyone to hear trade volume was light as we get closer to Christmas. Cash HRW wheat prices are within a nickel of their three-month high, but it is difficult to see what might take prices significantly higher this time of year. Problems in Australia and Argentina have been widely reported and the crop in the Northern Hemisphere is dormant. There is anticipation among traders about what might come out of Friday's meeting in Russia between the ag minister and exporters. However, there are also plenty of U.S. wheat supplies keeping a lid on prices and, so far, the U.S. export pace is not close to USDA's export estimate. For now, the trend in cash HRW wheat remains sideways, while the trends in cash SRW and HRS prices are up. DTN's National HRW Index closed at $4.93 Monday, near a three-month high and 29 cents below the March contract. DTN's National SRW Index closed at $4.93 Monday, near a four-month high.

Todd Hultman can be reached at todd.hultman@dtn.com

Follow him on Twitter @ToddHultman1

(CZ)

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Todd Hultman