DTN Closing Grain Comments

Higher US Dollar Pressures Most Commodities Lower

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

General Comments:

March corn closed down 1 1/2 cents per bushel and December corn was down 1 1/2 cents. March soybeans closed down 9 1/2 cents and November soybeans were down 8 cents. March K.C. wheat closed down 1/2 cent, March Chicago wheat was up 1 cent and March Minneapolis wheat was up 5 1/4 cents. The March U.S. dollar index is trading up 0.459 at 96.875. The Dow Jones Industrial Average is down 53.23 points at 25,053.10. April gold is down $6.70 at $1,311.80, March silver is down $0.13 at $15.68 and March copper is down $0.0235 at $2.7870. March crude oil is down $0.25 at $52.47, March heating oil is down $0.0059, March RBOB is down $0.0186 and March natural gas is up $0.079.

Corn:

March corn ended down 1 1/2 cents at $3.72 3/4 Monday, largely escaping a broad commodity sell-off related to Monday's stronger March U.S. dollar. The stronger U.S. dollar is the least of corn's worries these days as it largely reflects conditions in Europe while corn's competition is growing down south. Brazil's crop areas have increased chances for moderate to heavy showers this week, a beneficial forecast for Brazil's second corn crop, now being planted behind a soybean harvest that Dow Jones reported as 26% complete. Friday's lower estimate of 1.735 bb of ending U.S. corn stocks should be slightly supportive to prices that are also being helped by active exports. Early Monday, USDA said 29.3 million bushels of corn were inspected for export last week, putting the new total up 47% in 2018-19 from a year ago and still on track to come in higher than USDA's export estimate. Cash corn prices are encountering resistance near their highest prices in eight months, but the trend remains up, in line with its seasonal tendency. DTN's National Corn Index closed at $3.46 Friday, down from its highest level in seven months and 28 cents below the March contract. As mentioned above, the March U.S. dollar index is higher, up 0.46 and supported by a report from RTTNews.com that real GDP in the U.K. was up 1.4% in 2018, joining several other European nations reporting slow growth.

Soybeans:

March soybeans dropped 9 1/2 cents Monday to $9.05, part of a mostly red commodity board that also finds traders nervous about this week's trade talks with China. Even though Monday's prices were lower, Friday's new estimates from USDA were slightly bullish for soybeans, getting a lower 910 mb ending stocks estimate for the U.S. and a lower 106.72 mmt (3.92 bb) snapshot estimate for world soybean stocks. Bullish news continued Monday after USDA announced 120,000 mt of soybean meal were sold to Ecuador, half for 2018-19 and the other half for 2019-20. The export pace remains bearish however, as USDA later said 39.1 million bushels of soybeans were inspected for export last week, putting total inspections down 37% in 2018-19 from a year ago. Monday's market was in no mood to hear the bullish news for soybeans as trade talks with China are much more important for U.S. soybean demand and will be closely watched this week. With a lot riding on this week's talks, cash soybean prices are encountering resistance near their highest prices in six months and the trend remains sideways. DTN's National Soybean Index closed at $8.26 Friday, down from its highest prices in six months and $0.88 below the March contract.

Wheat:

March K.C. wheat ended down a half-cent at $4.93 3/4, showing slight bearish pressure from Monday's higher U.S. dollar index and also not finding much from Friday's USDA reports to help support prices. USDA slightly reduced its estimate of world ending wheat stocks to 267.53 mmt (9.83 bb) for 2018-19, but raised U.S. ending wheat stocks from 974 million to 1.010 billion bushels, due to a reduction in feed demand. Exports have also been lagging, but early Monday, USDA reported 4.7 mb (128,000 mt) HRW wheat sold to Nigeria and 4.4 mb (120,000 mt) of SRW wheat to Egypt, both for 2018-19. USDA also said 20.7 mb of wheat were inspected for export last week, bringing total inspections to 10% below last year. That is still below USDA's estimated pace and favors higher ending stocks later. Monday's seven-day forecast is mostly dry for the southwestern U.S. Plains, but expects large coverage of moderate to heavy rains east of the Mississippi River where SRW wheat grows. For now, the trend in cash SRW wheat remains up, even though prices are finding resistance at their five-month highs. The trends in cash HRW and SRW wheats remain sideways. DTN's National HRW Index closed at $4.72 Friday, 22 cents under the March contract and down from its highest prices in five months. DTN's National SRW Index closed at $4.93, also down from its highest prices in five months.

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

Follow him on Twitter @ToddHultman1

(CZ)

Todd Hultman