DTN Closing Grain Comments

General Comments:

March corn settled up 1 1/4 cents per bushel, while July corn was up 3/4 cent. March soybeans closed down 1/2 cent, and is perched right on the uptrend line, with July down 3/4 of a cent. Chicago March wheat settled up 1/2 cent, Kansas City March was down 1/2 cent, and Minneapolis March wheat, which had earlier set a new contract low, finished up 3 cents per bushel. Live cattle futures established a new contract high Thursday. The U.S. dollar index is down 0.5320 at 96.48. February gold is up $7.90 at $1,287. March silver was up 0.1620 at $15.285. The Dow Jones average is currently down 384 points, at one point, giving back half of Wednesday's record one-day rise. February crude oil is down $1.34 cents at $44.88 per barrel. January RBOB is $1.3059, down $0.0245. January heating oil is down $0.0516 at $1.6820.

Corn:

The corn market held up and was the one bright spot in U.S. export inspections, but needs more good news to keep from falling. So far, despite the rampant trade rumors of China looking to secure as much as 3 million metric tons of U.S. corn, there has been nothing to indicate such demand. In fact, January barge corn at the Gulf is said to be offered at 48 over the March futures and looking for buyers. Although shipments of corn are some 72% higher than last year at this time, sales have lagged. The good news is that U.S. corn is now attractively priced to the world. A poor ethanol market, as well as the pressure in both beans and wheat, have continued to weigh on corn futures. The commodity funds are still long a significant amount of corn futures, which makes this market susceptible to a further break without some bullish news soon. The EU on Wednesday, raised its corn production by nearly 5 million metric tons, and between Brazil and Argentina, they could have an additional 15 mmt of corn (590 million bushels) production this year. DTN's national corn Index closed at $3.39 on Wednesday, and reflects an average basis of 34 under March.

Soybeans:

Soybeans were under pressure for much of the latter part of the day, with March finishing right at the uptrend line, but nearly 7 cents below the daily high. In the absence of any daily sales reporting from USDA and with mostly favorable weather occurring in most of South America, this is a market that is in dire need of some more good demand news. There are some concerns with key soy areas of Brazil, which have gone much of December with well-below-normal rains, perhaps taking the top off of yield in Parana and Mato Grosso do Sul. However, with analysts projecting a still-record soy crop in Brazil of 120 mmt to 125 mmt, this is a market that is about to see even more burdensome world supplies soon. The trade needs to see additional China purchases, and we've all heard the rumors of 2 mmt more. But even a total of 5 mmt is unlikely to be enough to stem the bearish tide. March soybeans went right to the trend line at $8.82-$8.84, but a fall and close below that could lead to further weakness. Also, the new-crop soy versus corn ratio of 2.34% is doing little to discourage unwanted soybean acreage. The soybean basis at the Gulf sure would not suggest that any big business is being done. First-notice day on January futures is this Monday, and January longs must get out. DTN's National soybean Index closed at $7.88 on Wednesday and is priced $0.95 below the March futures contract.

Wheat:

In slow, two-sided trade, all three wheat markets were down for much of the session, with Minneapolis March scoring another new contract low before recovering. Only Minneapolis and Chicago finished modestly higher. Rosstat from Russia came out with a revised Russian wheat production number of 72 mmt compared to 70 mmt from USDA. Ukraine indicated that their total grain harvest would be 70.1 mmt compared to 61.3 mmt last year and that exports would be 21.7 mmt versus just 19 mmt the prior year. Export news has left much to be desired for U.S. wheat, and shipments are off 14% from the prior year. On a bullish note, the trade is monitoring Argentina, where some unharvested wheat could be subject to excess rains and quality issues. Good moisture is currently moving across U.S. wheat areas, beneficial to the already good moisture profile. DTN's National HRW index closed at $4.67 on Wednesday, and that is an average basis of 29 under Kansas City March futures.

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

(CZ)

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