DTN Closing Grain Comments

Soybeans End Higher as Investors Return to Markets

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN illustration by Nick Scalise)

General Comments:

March corn closed up 1 3/4 cents per bushel and December corn closed up 1/2 cent. March soybeans closed up 9 cents and November soybeans closed up 7 1/2 cents. Kansas City March wheat closed up 2 cents, while Chicago March wheat closed unchanged and Minneapolis March wheat was up 2 1/4 cents per bushel.

The March U.S. dollar index is up 0.28 at 96.00. The Dow Jones Industrial Average is at 24,688.10, up 318.00 points. February gold is at $1,281.90, down $10.40 per ounce, March silver is at $15.39, down $0.15 per ounce and March copper is at $2.71, up $0.0325. February crude oil is at $53.76, up $1.69, February heating oil is up $0.0326, February RBOB is up $0.0261 and February natural gas is up $0.080.

For the week:

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

Corn:

March corn ended up 1 3/4 cents at $3.81 3/4 Friday, surviving Tuesday's 7 1/4 cent sell-off with a gain of 3 1/2 cents on the week. It is understandable for traders to be jumpy in week number four of the government shutdown while trade talks with China get closer to the March 1 deadline. As far as corn is concerned, however, the fundamental outlook is still mostly supportive for prices the next few months and U.S. exports should still be active. It is also helpful that the forecast for south-central Brazil remains hot and mostly dry the next seven days. Demand for ethanol remains a modest bearish concern for corn prices in early 2019, but so far, production is not far from expectations. Technically speaking, March corn futures are holding within their sideways range and did well to recover from Wednesday's selling. With four weeks of unreported export sales data locked away in a dark room and active weather concerns in South America, the trend in cash corn remains up. DTN's National Corn Index closed at $3.48 Thursday, near its highest price in seven months and 32 cents below the March contract. The March U.S. dollar index is up 0.28, getting a lift from January's rebounding stock market.

Soybeans:

March soybeans finished up 9 cents at $9.16 3/4 Friday, posting a 6 1/2 cent gain on the week after prices were rescued by two days of bullish rumors. On Thursday, several news sources reported U.S. officials were considering dropping tariffs against China in an effort to advance trade talks. On Friday, Bloomberg news cited unnamed sources as saying that China offered to commit to six years of large U.S. ag purchases that would bring a significant reduction to the trade deficit. Both rumors are possible, but the "maybe" factor is so large, we are still a long way from confirming any credible change on the trade front. If nothing else, the rumors did inspire a short-covering rally at the end of the week, which kept March soybean prices above recent support. On a more reliable basis, the latest seven-day forecast for south-central Brazil remains hot and mostly dry with harvest starting to pick up in some areas. With USDA not releasing export sales information or updated WASDE reports, we have to assume the fundamental outlook for soybeans remains bearish. Technically, the trend of cash soybean prices remains sideways with prices not far from their seven-month high. DTN's National Soybean Index closed at $8.16 Thursday, down from recent highs and priced $0.92 below the March futures contract.

Wheat:

March K.C. wheat closed up 2 cents at $5.06 Friday and was up 1 1/2 cents on the week, not showing much change yet in the month of January. However, we did see the Mar/May K.C. wheat spread narrow to -9 1/2 cents Friday, the highest it has traded since early August. It is one more sign of possible support for K.C. wheat prices to see this example of front-month buying accompany rumors of possible wheat purchases for export (see DTN Senior Analyst Dana Mantini's Before The Bell comments). Unfortunately, we do not have USDA available to confirm the export news, but if the March K.C. contract could close above the 100-day average at $5.22, it would have a chance to attract noncommercial buying. Futures spreads also look supportive to Chicago and Minneapolis wheat prices and are the best demand indicators we have during the government shutdown. For cash HRW and HRS wheat prices, the trends remain sideways, while the trend is up for cash SRW wheat. DTN's National HRW index closed at $4.80 Thursday, closer to its December high and down 24 cents from the March futures contract. DTN's National SRW index closed at $4.93 Thursday, down from its highest price in three months, but staying well-supported.

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

Follow him on Twitter @ToddHultman

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Todd Hultman