DTN Closing Grain Comments

Grains Ignore Soybean Sale, Tumble Lower

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

General Comments:

March corn was down 3 3/4 cents and December 2019 corn was down 2 1/2 cents. March soybeans were down 7 3/4 cents and November 2019 soybeans were down 7 1/4 cents. March Kansas City wheat closed down 8 3/4 cents, March Chicago wheat was down 10 1/4 cents, and March Minneapolis wheat was down 8 1/4 cents.

The March U.S. dollar index is down 0.19 at 96.39. February gold is down $4.60 at $1,249.00 while March silver is up 1 cent and March copper is up $0.0245. The Dow Jones Industrial Average is up 121 points at 23,730. February crude oil is up $0.72 at $47.32. February heating oil is up $0.0360 while February RBOB gasoline is up $0.0144 and February natural gas is down $0.105.

Corn:

March corn fell 3 3/4 cents to $3.81 3/4 Wednesday, still in its narrow, sideways range, but encountering disappointment from a third consecutive day of no export sales announcements and a worrisome spike in ethanol inventory. Earlier Wednesday, the U.S. Energy Department said ethanol production held steady last week at 1.046 million barrels per day, but ethanol inventory jumped up, from 22.9 million to 23.9 million barrels, not far from its highest level on record. For the first time in several years, corn demand for ethanol is showing bearish signs of weakness as ethanol plants are struggling to turn a profit. The other disappointment for corn has been a lack of export news after rumors got traders excited about a possible purchase from China. Thursday morning's weekly report from USDA will give the next update on exports. For now, cash corn prices remains up in quiet trading. DTN's National Corn Index closed at $3.51 Tuesday, its highest price in six months and priced 35 cents below the March contract. In outside markets, the March U.S. dollar index is down 0.19 after the Federal Reserve raised the federal funds target a quarter percent to 2.25% to 2.50%, as expected and projected two more rate hikes in 2019, reported CNBC.com.

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Soybeans:

March soybeans fell 7 3/4 cents to $9.13 Wednesday, the lowest close in December after USDA announced 44.1 million bushels (mb) (1,199,000 metric tons) of U.S. soybeans were sold to China for 2018-19. Evidently, the sales announcements are not coming quickly enough to satisfy trader expectations as prices are falling back from their highest levels in four months. In the bigger picture, China's purchases are not likely to end up anywhere near the 1.017 billion bushels (bb) they bought from the U.S. last year, and there is a good chance that U.S. ending soybean stocks will still be near 1 bb or more in 2018-19. Meanwhile, southern Brazil has a chance for helpful showers in this week's forecast and Argentina's forecast is favorable, expecting lighter rain amounts and less threat of flooding than seen earlier. 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 $8.23 Tuesday, down from its highest level in four months and priced $0.85 below the January contract.

Wheat:

March K.C. wheat dropped 8 3/4 cents to $5.08 1/2 Wednesday, falling back from Friday's one-month high, while exports continue to lag below last year's low pace. Even though world wheat production was down 4% in 2018-19 from the previous season, the U.S. simply has not seen any benefit in the way of higher exports, and it is possible that traders' patience is running out as noncommercials still have small net-long positions in both, Chicago and K.C. wheat. USDA's next update on export sales is due out Thursday morning, and unless USDA has a surprise, this market is suffering from a lack of bullish news. Friday's meeting in Russia will be watched and may signal change, but so far, Russia continues to be an aggressive competitor in export markets. 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 $4.88 Tuesday, down from a three-month high and 29 cents below the March contract. DTN's National SRW index closed at $5.02 Tuesday, near its 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