DTN Closing Grain Comments

General Comments:

March corn closed down 3/4 cents per bushel and December corn was down 1/2 cents. March soybeans closed up 1 1/2 cents and November soybeans were up 2 1/2 cents. March K.C. wheat closed down 2 cents, March Chicago wheat was down 1 1/4 cents and March Minneapolis wheat was down 1 3/4 cents. The March U.S. dollar index is trading up 0.328 at 96.145. The Dow Jones Industrial Average is down 28.27 points at 25,383.25. April gold is down $6.20 at $1,313.00, March silver is down $0.17 at $15.67 and March copper is up $0.0120 at $2.8290. March crude oil is up $0.33 at $53.99, March heating oil is up $0.0182, March RBOB is up $0.0316 and March natural gas is up $0.012.

Corn:

March corn ended down 3/4 cent at $3.80 Wednesday, staying within its narrow, sideways range and trading light volume ahead of Friday's WASDE reports. With basically two months of WASDE reports merged into one on Friday, along with a tally of Dec. 1 corn stocks, there will be plenty of numbers to digest. U.S. ending corn stocks are not likely to show much change, but the key may be whether there is a surprise in the Dec. 1 corn inventory. One of corn's demand problems in early 2019 is a slower pace of ethanol production. The Energy Department said Wednesday that last week's production pace fell from 1.012 million to 967,000 barrels per day, a weekly pace that is lower than USDA's corn demand estimate for ethanol. On the other hand, the U.S. Census Bureau had slightly bullish news that U.S. exports of ethanol were up 43% in November from a year ago and are up 30% in 2018 with one more month to report. On the production side, Wednesday's seven-day forecast continues to look favorable for corn crops in Brazil and Argentina with beneficial rains expected. For now, the trend in cash corn remains up, in line with its seasonal tendency. DTN's National Corn Index closed at $3.52 Tuesday, at its highest level in seven months and 29 cents below the March contract. In outside markets, non-ag commodities are mostly higher, in spite of the March U.S. dollar index trading up 0.33.

Soybeans:

Trading in March soybeans stayed quiet Wednesday, ending up 1 1/2 cents at $9.21 3/4 on low volume. There are plenty of reasons for traders to be cautious in this market with trade talks expected to resume next week, after China's New Year. Friday's USDA reports could also be holding bearish surprises for traders with soybean demand struggling in the first quarter of 2018-19 and crop conditions looking good in Argentina, even though estimates for Brazil have fallen recently on dry weather. Since December, a return of China's business has been helpful, but limited. Early Wednesday, USDA reported 19.2 million bushels (523,000 mt) of U.S. soybeans were sold to China and 6.9 mb (182,000 mt) were sold to unknown destinations, both for 2018-19. 2.3 mb (63,000 mt) were also sold to China for 2019-20. Soybean oil has been the more-bullish leg of the soy complex lately. March soybean oil posted its highest close in seven months at 30.90 cents Wednesday, after the U.S. Census Bureau said exports of biodiesel more than tripled in November from last year's total, helped by sales to Canada. With a lot still riding on the outcome of trade talks with China, the trend for cash soybeans remains sideways. DTN's National Soybean Index closed at $8.32 Tuesday, staying below the old July high of $8.41 and $0.89 below the March contract.

Wheat:

March K.C. wheat ended down 2 cents at $5.09 1/4 Wednesday as all three wheats are off to a quiet start in February. Technically speaking, we could say Chicago wheat has a slight bullish edge as it is trading above its 100-day average while the other two wheats are closely below their averages. This is a time of year when exports from Ukraine and Russia are expected to slow and the U.S. has a better chance for export business. Of course, USDA's export sales data will not be up to date until Feb. 22, but we can see that cash winter wheat prices are near their highest levels in five months and futures spreads are showing good demand for the near month of both Chicago and K.C. contracts. On the other hand, one of these days in the next month or two, traders will start to look ahead to the new-crop season and early estimates of world production are likely to look bearish. In addition, USDA's report of Dec. 1 U.S. wheat stocks is apt to look bearish Friday and may increase its estimate of U.S. ending wheat stocks for 2018-19. For now, 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 $4.89 Tuesday, 23 cents under the March contract and near its highest prices in five months. DTN's National SRW Index closed at $5.01, also near 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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