DTN Closing Grain Comments

Grain Hibernation Continues

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

General Comments:

March corn closed up 1 1/2 cents per bushel and December corn was up 1 cent. March soybeans closed up 1 3/4 cents and November soybeans were up 2 1/2 cents. March K.C. wheat closed up 3/4 cent, March Chicago wheat was up 1 1/2 cents and March Minneapolis wheat was up 1/4 cent.

The March U.S. dollar index is trading up 0.240 at 95.810. The Dow Jones Industrial Average is up 161.20 points at 25,400.57. April gold is down $0.70 at $1,318.60, March silver is down $0.06 at $15.83 and March copper is up $0.0225 at $2.8170. March crude oil is down $0.66 at $53.90, March heating oil is down $0.0061, March RBOB is down $0.0022 and March natural gas is up $0.005.

Corn:

I haven't yet proven that corn price volatility correlates to Midwest air temperatures, but this week is making a strong case for it as prices refuse to budge. March corn ended up 1 1/2 cents at $3.80 3/4 Tuesday on light volume as traders appear to be waiting for USDA's reports to be released on Friday. Since USDA's January reports were skipped, Friday is looking at U.S. and South American crop estimates in the World Agricultural Supply and Demand Estimates (WASDE) report, a reading on first-quarter demand in the December 1 Grain Stocks report and USDA's estimate of winter wheat seedings for 2019, possibly the lowest in over a hundred years. In South America, the outlook for Brazil's second corn crop, now being planted, is improving with broader rain coverage in this week's forecast. Crop conditions in Argentina are mostly favorable and USDA's 42.5 million metric ton (mmt) corn crop estimate for Argentina is not expected to change much Friday, if at all. For now, the trend in cash corn remains up, in line with its seasonal tendency. DTN's National Corn Index closed at $3.50 Monday, down from its highest level in seven months and priced 29 cents below the March contract. In outside markets, the March U.S. dollar index is trading up 0.24, but most other commodities are mixed.

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Soybeans:

Like corn, March soybeans didn't show much trading activity Tuesday, ending up 1 3/4 cents at $9.20 1/4 Tuesday. The March contract continues to quietly tread water in the low $9s and traders are apt to remain cautious ahead of Friday's reports. USDA will probably show a slightly smaller U.S. soybean crop estimate for 2019 and many will be watching to see how low they go for Brazil. USDA's soybean crop estimate for Argentina is currently at 55.5 mmt and may be a little high, but shouldn't change much as conditions are mostly favorable there. USDA's estimate of December 1 soybean stocks will be higher than a year ago and is apt to look bearish on Friday. Earlier Tuesday, USDA said 95.6 million bushels (2.603 mmt) of U.S. soybeans were sold to China and another 10.1 million bushels (274,000 mt) were sold to unknown destinations, both for 2018-19. The sales are welcome of course, but as we can see from the lack of price response, they were also well-anticipated. In spite of all of Friday's report numbers, the main concern for soybean demand continues to be restoring trade with China. According to Dow Jones, the CEO of Archer Daniels Midland said Tuesday he expects the dispute with China to resolve this year. With a lot riding on the outcome of trade talks, the trend for cash soybeans remains sideways. DTN's National Soybean Index closed at $8.30 Monday, staying below the old July high of $8.41 and priced $0.89 below the March contract.

Wheat:

March K.C. wheat trade a little lower most of the day, but ended up 3/4 cent at $5.11 1/4, also not venturing out much on Tuesday. Friday's reports are not likely to show much change in USDA's balance sheets for U.S. wheat. I suspect no change to the export estimate for U.S. wheat until sales data are updated on February 22. December 1 wheat stocks may be a little higher than a year ago, but should not shock the market as low exports in the first half of the season were widely advertised. USDA's report on winter wheat seedings will hold interest for wheat traders Friday and any number below last year's 32.5 million acres will be the smallest U.S. winter wheat planting in over a hundred years. So far in 2019, K.C. wheat prices are holding sideways in a narrow range, protecting their 2018 gain and staying above the $5.00 mark. The trends in cash HRW and SRW wheats remain up, while the trend in cash SRW wheat is sideways. DTN's National HRW index closed at $4.88 Friday, 22 cents under the March contract and down from its highest prices in five months. DTN's National SRW index closed at $5.01, down from its highest prices in five months.

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

Follow him on Twitter @ToddHultman1

(CZ)

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Todd Hultman