DTN Closing Grain Comments

General Comments:

March corn was up 2 cents and December 2019 corn was up 1 1/4 cents. March soybeans were up 5 1/2 cents and November 2019 soybeans were up 5 cents. March K.C. wheat closed up 1/2 cent, March Chicago wheat was up 2 1/4 cents, and March Minneapolis wheat was up 3 1/4 cents. The March U.S. dollar index is down 0.66 at 94.82. February gold is up $6.20 at $1,292.10 while March silver is up 2 cents and March copper is up $0.0065. The Dow Jones Industrial Average is up 118 points at 23,905. February crude oil is up $2.56 at $52.34. February heating oil is up $0.0554 while February RBOB gasoline is up $0.0647 and February natural gas is up 0.5 cents.

Corn:

March corn ended up 2 cents at $3.82 Wednesday, taking back most of Tuesday's loss and maintaining a sideways trading range. Weather conditions continue to support corn and soybean prices with Wednesday's seven-day forecast expecting light rain amounts and hot temperatures in southern Brazil. Crop condition ratings have been high in Argentina, but are threatened by flooding and more heavy rains in the forecast for northern Argentina. Meanwhile, the U.S. government remains partially shut down and President Donald Trump's televised speech on Tuesday evening didn't sound like lawmakers are near a solution anytime soon. Until the federal government opens again, export sales remain under a cloak of privacy. For now, cash corn is currently priced near the midpoint of this year's expected range and the trend remains up. DTN's National Corn Index closed at $3.48 Tuesday, near its highest price in six months and 32 cents below the March contract. In outside markets, the March U.S. dollar index is down 0.66, trading at a new two-month low as expectations for further interest rate hikes have eased. February crude oil is trading up $2.56 as production cuts from OPEC appear to be having a bullish impact.

Soybeans:

March soybeans closed up 5 1/2 cents at $9.24 Wednesday, helped by ongoing talk of possible purchases from China. It is difficult to know how long these rumors can be cited as a reason for higher prices, but that is about all traders have to go on while USDA is not reporting export sales. FOB soybean prices in New Orleans are competitive with Brazil and are also 40 cents above the January futures contract, down from a 66-cent premium a year ago. In spite of recent sales, the lower premium is a bearish sign of low export activity and supports USDA's notion that U.S. ending soybean stocks will be burdensome in 2018-19. The bullish possibility for soybean prices depends on persuading China to drop its 25% tariff on U.S. soybeans. Three days of negotiations just ended and traders are waiting for official statements from both sides, but it appears more talks are still needed. The other bullish possibility for soybean prices is currently coming from a hot and dry forecast for southern Brazil and flooding in northern Argentina. According to Dow Jones, the private consultant AgRural lowered its estimate of Brazil's soybean crop from 121.4 mmt to 116.9 mmt (4.3 bb). For now, the trends for both, cash and futures prices are sideways in soybeans. DTN's National Soybean Index closed at $8.28 Tuesday, down from its highest level in four months and $0.91 below the March contract. Among January contracts early Wednesday, there were 1,142 delivery intentions for soybeans, 510 for meal and 251 for soybean oil.

Wheat:

March K.C. wheat ended up a half-cent at $5.05 1/2 Wednesday, slightly encouraged by news from Dow Jones that U.S. wheat was included in a recent purchase of 550,000 metric tons of wheat by Algeria. Dow Jones also reported that Egypt was in for more wheat, but unconfirmed talk suggested Russia may have the advantage there. Yes, these are minor factors in the world of wheat, but at this time of year when crops in the Northern Hemisphere are dormant and USDA is not reporting export sales, there is not much news happening. One current story that does have legs is the possible loss of the tail end of Argentina's wheat crop. The Buenos Aires Grain Exchange said last week 90% of the wheat crop was harvested, but flooding and more rain in the forecast for northern Argentina have created problems where further downgrades to USDA's estimate of a 19.5 mmt crop could be likely. Of course, we can't say when the next round of USDA estimates will arrive after the Jan. 11 reports were cancelled due to a lack of government funding. For now, the trends in cash HRW and HRS wheat are still sideways, while the trend in cash SRW wheat remains up. DTN's National HRW Index closed at $4.80 Tuesday, down from a three-month high and 25 cents below the March contract. DTN's National SRW Index closed at $4.92 Friday, down from its four-month high.

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

Follow him on Twitter @ToddHultman1

(CZ)

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