DTN Early Word Grains

Crop Prices Lightly Higher as Tuesday Starts Quiet

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

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

CME Globex Recap:

European stock markets and the Dow Jones futures were a little higher early Tuesday, while long-term interest rates were a little lower. According to Dow Jones, Germany reported its lowest annual GDP growth in five years and the People's Bank of China said it would help the economy with expanded credit and lower taxes. Grains were starting the day slightly higher and the rest of the commodity board was mixed.

OUTSIDE MARKETS:

Previous closes on Monday showed the Dow Jones Industrial Average down 86.11 at 23,909.84 and the S&P 500 down 13.65 at 2,582.61 while the 10-yr Treasury yield ended at 2.71%. Early Tuesday, DJIA futures are up 89 points. Asian markets are higher with Japan's Nikkei 225 up 195.59 (1.0%) and China's Shanghai Composite up 34.58 points (1.4%). European markets are higher with London's FTSE 100 up 7.08 points (0.1%), Germany's DAX up 13.44 points (0.1%), and France's CAC 40 up 9.07 points (0.2%). The March euro was down 0.004 at 1.149 and the March U.S. dollar index was up 0.28 at 95.48. March 30-year T-Bonds were up 13/32nds while February gold was down $2.30 at $1289.00 and February crude oil was up $0.44 at $50.95. Soybeans on China's Dalian Exchange are up slightly while soymeal is down 0.7%.

BULL BEAR
1) Cash corn prices remain near their highest level in seven months after USDA reported nearly 40 million bushels of inspections for last week. 1) Ongoing concerns about a slowing world economy and negative impact from the ongoing government shutdown are giving investors reason to be cautious.
2) Once again, the latest seven-day forecast remains hot and mostly dry for southern Brazil, still stressful to crop conditions. 2) Dow Jones reported China imported 5.7 mmt of soybeans from all sources in December, down 40% from a year ago.
3) Several private estimates of Brazil's soybean crop have been lower than CONAB's 118.8 mmt, while the dry pattern continues. 3) In spite of weather concerns in South America, crop estimates have shown modest reductions so far.

MORE COMMODITY-SPECIFIC COMMENTS

CORN March corn is up 1 3/4 cents higher early Tuesday, once again demonstrating firm support in January, but not enough yet to take March futures prices higher. The U.S. government remains partially closed and we assume corn export activity remains up from a year ago, but corn demand for ethanol production has shown recent weakness. The anticipation of higher corn acres this spring is also keeping December 2019 corn prices in the low $4s. The most bullish potential for this year's corn prices so far, is coming from south-central Brazil where the latest forecast remains hot and mostly dry. Technically, corn futures remain in sideways trading ranges, while cash corn is gradually trending higher.

SOYBEANS March soybeans are up 1 3/4 cents Tuesday, finding early support in the low $9s after prices backed away from attempts to move higher earlier this month. The old high from July of $9.41 3/4 stands out as a line of resistance in the sand for a market that is facing more than its usual share of unknown factors in 2019. So far, China has not budged on its 25% tariff and it is still difficult to know if the U.S. and China will find agreeable trade terms before the March 1 deadline. Meanwhile, the hot and mostly dry pattern remains in the forecast for south-central Brazil and has taken earlier estimates of a record soybean crop down to possibly a modest reduction from a year ago. Fundamentally, the U.S. still has a lot of soybeans to deal with, but the trend of March futures prices remains sideways in early 2019.

WHEAT March K.C. wheat is up 1/2 cent early, staying in a narrow sideways range the past twelve days with little happening to give prices a direction. With March prices still not far from their lowest prices of 2018, the market has the feel of a moderately bearish mood, but cash HRW wheat prices are nearly a dollar higher than a year ago and are holding well above their November low of $4.31. We don't know how export sales have gone the past three weeks, but the numbers are probably still sluggish compared to a year ago. There continues to be hope that sales may pick up before the next wheat season begins in June, but it is difficult seeing enough business to give U.S. prices a substantial lift. For now, cash HRW wheat prices are holding sideways, while cash SRW wheat prices are in a gradual uptrend.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.46 $0.00 -$0.33 Mar $0.000
Soybeans: $8.12 -$0.06 -$0.91 Mar $0.003
SRW Wheat: $4.89 -$0.05 -$0.26 Mar $0.002
HRW Wheat: $4.75 -$0.05 -$0.24 Mar $0.010
HRS Wheat: $5.28 -$0.05 -$0.38 Mar -$0.003

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

Toddcan be followed throughout the day on Twitter @ToddHultman1

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Todd Hultman