DTN Early Word Grains

Commodity Board Green Early

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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6:00 a.m. CME Globex:

March corn is up 2 1/2 cents, March soybeans are up 3 1/2 cents, and March K.C. wheat is up 4 3/4 cents.

CME Globex Recap:

Stock markets are mixed in Europe and a little higher in Asia, while nearly all commodities are off to a higher start on Friday. Even grains are showing a firmer start after suffering losses on Thursday. This is day 21 of the government shutdown and Friday's USDA reports have been postponed.

OUTSIDE MARKETS:

Previous closes on Thursday showed the Dow Jones Industrial Average up 122.80 at 24,001.92 and the S&P 500 up 11.68 at 2,596.64 while the 10-yr Treasury yield ended at 2.73%. Early Friday, DJIA futures are down 21 points. Asian markets are moderately higher with Japan's Nikkei 225 up 196 points (1.0%) and China's Shanghai Composite up 18.73 points (0.7%). European markets are mixed with London's FTSE 100 up 25.53 points (0.4%), Germany's DAX down 26.02 points (-0.2%), and France's CAC 40 down 11.87 points (-0.25%). The March euro was up 0.003 at 1.159 and the March U.S. dollar index was down 0.19 at 94.93. March 30-year T-Bonds were up 8/32nds while February gold was up $5.80 at $1293.20 and February crude oil was up $0.45 at $53.04. Soybeans on China's Dalian Exchange is down 1% while soymeal is down 1.2%.

BULL BEAR
1) The seven-day forecast remains hot and mostly dry for southern Brazil, still stressful to crop conditions. 1) The latest round of trade talks with China may have made progress, but nothing specific was mentioned by either delegation.
2) The U.S. Dollar Index recently broke below support after the Fed mentioned "some further gradual increases" in their latest meeting minutes. 2) CONAB's soybean crop estimate of 118.8 mmt acknowledged adverse weather, but was more than some were hoping for.
3) Bullish arguments have been more difficult to find lately, but the stock market's rebound may have eased investor concerns. 3) Still lacking export sales information from USDA, but it seems likely that U.S. wheat sales are still lagging.

MORE COMMODITY-SPECIFIC COMMENTS

CORN March corn is up 2 1/2 cents early Friday, showing a little spunk after Thursday's selling and still getting support from a forecast for hot and mostly dry weather in southern Brazil. At the same time, chances for heavy rain persist in northern Argentina, adding to areas where flooding has hurt crops. We can't yet say that these are big crop losses in South America, but there is legitimate concern as to how Brazil's second corn crop will do, starting in hot and dry conditions. Technically, March corn remains firmly sideways, beneath resistance at $3.90 1/2, while the trend in cash corn still points up.

SOYBEANS March soybeans are up 3 1/2 cents early, not much of a rebound after Thursday's 17 1/4 cent drubbing, but at least able to show some early support. Since the trade dispute erupted with China it has always been difficult to assess U.S. soybean demand in 2018-19 and that uncertainty has only gotten worse since the federal government shut down. There will be no tally of December 1 Grain Stocks released Friday and export sales reporting has been dark for three weeks now. We would like to assume China has bought at least 5 million metric tons (mmt) or 184 million bushels(mb) of U.S. soybeans as many are saying, but cannot say for sure. For now, March soybean futures are holding sideways, below resistance at $9.42 and hanging on to a steep premium of 91 cents above the national average for cash prices.

WHEAT March K.C. wheat is up 4 3/4 cents early with similar gains also seen in Chicago and Minneapolis. One thing in wheat's favor this week has been a drop in the U.S. dollar to its lowest prices in over two months. The heavy selling of U.S. stocks in December also seems to have quieted and that is helping commodity prices in general. For wheat specifically, U.S. prices are said to be more internationally competitive these days and some U.S. wheat was included in a sale to Algeria this week, but there is little sign of U.S. wheat movement while U.S. export sales are not being published. Since falling to a low of $4.82 in November, March K.C. wheat has held sideways with little news to push prices in either direction.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.44 -$0.06 -$0.33 Mar -$0.002
Soybeans: $8.15 -$0.18 -$0.91 Mar -$0.006
SRW Wheat: $4.88 -$0.07 -$0.26 Mar -$0.003
HRW Wheat: $4.73 -$0.07 -$0.26 Mar -$0.003
HRS Wheat: $5.26 -$0.07 -$0.38 Mar -$0.001

Todd Hultmancan be reached at todd.hultman@dtn.com

Todd can be followed throughout the day on Twitter @ToddHultman1

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Todd Hultman