DTN Closing Grain Comments

Soybeans Leads Grain Sector Lower

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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General Comments:

March corn was down 5 3/4 cents and December 2019 corn was down 5 cents. March soybeans were down 17 1/4 cents and November 2019 soybeans were down 14 1/2 cents. March Kansas City wheat closed down 6 3/4 cents, March Chicago wheat was down 6 1/4 cents, and March Minneapolis wheat was down 6 1/2 cents.

The March U.S. dollar index is up 0.32 at 95.11. February gold is down $4.50 at $1,287.50 while March silver is down 12 cents and March copper is down $0.0205. The Dow Jones Industrial Average is up 60 points at 23,939. February crude oil is up $0.04 at $52.40. February heating oil is up $0.0212 while February RBOB gasoline is up $0.0034 and February natural gas is up 1.0 cent.

Corn:

March corn fell 5 3/4 cents to $3.76 1/4 Thursday, in a broad sell-off among grains. There are numerous possible reasons for Thursday's selling in grains, but in the case of corn, bearish reasons are limited to Conab's 91.2 million metric tons (mmt) (3.6 billion bushels) corn crop estimate for Brazil and the March U.S. dollar trading higher. Crop estimates for Brazil still have a long way to go, and the forecast for southern Brazil remains hot and dry the next seven days. As we are starting to get used to, USDA's weekly report of export sales went missing for a third consecutive week and Friday's USDA reports have been postponed, waiting for the federal government to open for business again. Hopefully, the government will find a way to open again soon as it would be nice to catch up on corn's export sales and CFTC data. FOB corn prices in New Orleans are priced 58 cents above the January futures contract, which is just a little lower than last year's 62-cent premium and a sign of decent export activity. Aside from the current lack of market information and in spite of Thursday's lower price, the trend in cash corn remains up, in line with its seasonal tendency. DTN's National Corn Index closed at $3.50 Wednesday, near its highest price in six months and priced 32 cents below the March contract. In outside markets, the March U.S. dollar index is up 0.32 and other commodities are mixed to lower.

Soybeans:

March soybeans dropped 17 1/4 cents to $9.06 3/4 Thursday, coming under bearish pressure from a number a possible directions. For one, this week's meeting between U.S. and Chinese trade officials ended on a somber note with no significant progress cited. Brazil's crop agency, Conab issued a soybean crop estimate of 118.8 mmt (4.4 bb), which was down from its December estimate of 120.1 mmt, but not as low as other private estimates. Private consultant AgRural for example, estimated Brazil's soybean crop at 116.9 mmt earlier this week as reported by Dow Jones. DTN's forecast remains mostly hot and dry for southern Brazil the next seven days. Making forecasts two weeks out can be tricky, and even though some see a chance for rain in week two, DTN leans toward a continuation of mostly dry conditions. Aside from weather concerns, the fundamental outlook for soybeans remains bearish, acknowledging plenty of uncertainty regarding the outcome of U.S. trade talks with China. In spite of Thursday's lower close, the trend for cash soybeans remains sideways. DTN's National Soybean Index closed at $8.33 Wednesday, near its highest level in four months and priced $0.91 below the March contract. Open contracts of January soybeans, meal and bean oil are dangerously low heading toward expiration on Monday.

Wheat:

March K.C. wheat closed down 6 3/4 cents at $4.98 3/4 Thursday as all three wheats also succumbed to bearish pressure in the grain complex. Wheat prices also showed disappointment from news that Egypt bought all 415,000 metric tons (mt) of Wednesday's purchase from Russia, the world's top wheat exporter in 2018-19. Oddly enough, we can hear more about foreign wheat sales to other countries these days than we can hear about our own U.S. exports, but that is the way it will be until lawmakers find a way to fund the federal government again. USDA will not have a winter wheat seedings estimate available on Friday, but we can see from Thursday's updated U.S. Drought Monitor that there is virtually no drought concern in the southwestern U.S. Plains at this time. With no U.S. export sales data available, wheat prices are languishing, mostly sideways as we work our way through winter. 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 Wednesday, down from a three-month high and 25 cents below the March contract. DTN's National SRW index closed at $4.95, down from its four-month high.

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

Follow him on Twitter @ToddHultman1

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Todd Hultman