DTN Closing Grain Comments

General Comments:

March corn closed up 5 1/2 cents per bushel and December corn was up 4 1/4 cents. March soybeans closed up 12 1/2 cents and November soybeans were up 11 cents. March K.C. wheat closed down 1 3/4 cents, March Chicago wheat was up 1 3/4 cents and March Minneapolis wheat was up 2 3/4 cents. The March U.S. dollar index is trading down 0.367 at 96.490. The Dow Jones Industrial Average is up 388.14 points at 25,441.25. April gold is up $2.50 at $1,314.40, March silver is up $0.01 at $15.70 and March copper is down $0.0185 at $2.7715. March crude oil is up $0.64 at $53.05, March heating oil is up $0.0137, March RBOB is up $0.0049 and March natural gas is up $0.045.

Corn:

After breaking through trendline support on Friday and Monday, March corn has rallied back above the trend. Optimism over renewed trade discussions in China this week, along with strong outside markets, are supporting corn. Also helping corn futures is word that EPA is working on a plan to expand the usage of E-15 ethanol, which would spur much more corn usage. Weather in the U.S. will continue to be supportive, with bitter cold temps on tap in the next 12 daysof the forecast, along with frequent rounds of rain and snow. At this point, it would appear we could have a later spring than normal, perhaps delaying planting. Last week's export inspections, at just 29.3 million bushels, left much to be desired, but the shipment pace remains 47% higher than a year ago. This morning, a new sale of 122,376 mt (4.8 million bushels) was announced as sold to unknown. The high cost of barge freight, however, is making the U.S. less competitive in world markets. Also, Argentine corn basis has fallen 20 cents this month, as they look to have a record large corn crop on the way. The weather is much improved in Brazil's safrinha corn crop growing area as well, with rain coverage expected to be widespread. Parana and Mato Grosso do Sul have been exceptionally dry and soil moisture needs a boost, as the safrinha planting expands. That planting pace is expected to reach 40% by the end of the week. CONAB -- the Brazilian supply agency -- is calling the corn crop 91.6 mmt, well over last year's production, but shy of USDA's 94.5 mmt projection. DTN's National Corn Index closed at 3.44 on Monday, and reflects an average basis of 31 under March.

Soybeans:

Following the past two days of heavy fund selling (estimated to be 9,000 contracts of soybeans on Monday), soybeans closed sharply higher on Tuesday. Strong outside markets, and some renewed optimism suggesting this week's trade delegation meeting in Beijing will lead to a positive solution, are fueling Tuesday's upward correction. Also supportive is yet another reduction in Brazil's soybean production estimate, this time from CONAB, Brazil's supply and statistical agency, at 115.3 mmt, down from last month's 118.8 mmt. This production estimate would be a full 5 mmt (184 million bushels) below last year's record large crop. There are others, such as INTL FC Stone and Ag Rural, with even lower estimates, both at 112.5 mmt. The trade in general appears to be in the 113 mmt to 116 mmt range. Export inspections last week on soybeans, were decent at 39.1 million bushels, and the gap is narrowing versus last year, but we remain some 37% below last year's shipment pace. Weather in Brazil has changed and should at least stabilize, if not improve Brazil conditions, with some 74% of the crop left to harvest there. Near-to-above normal rains are projected, helping late planted soybeans and newly planted safrinha corn. The prospect that delegates to this week's trade meeting are likely to vote to delay the imposition of the March 1 scheduled tariff increase is also a supportive input for the soy market. Once a solution is reached, it is likely China will agree to buy more U.S. ag products. March soybeans are trading near the 200-day moving average again. DTN's National Soybean Index closed at $8.17 on Monday and is 88 cents below the March futures contract.

Wheat:

Wheat was mixed in quiet trade, with Kansas City July wheat once again setting a new contract low at $5.00 1/4. Chicago July wheat, for the fourth time, has hit the contract low at $5.17 and bounced. While I have never heard of a quadruple bottom, Tuesday's close above $5.17 at $5.22 would be a considered a "tweezer bottom" candlestick pattern, with a higher close on Wednesday creating a buy signal. A tweezer bottom is the candlestick charting answer to a double bottom on a bar chart. With wheat inspections last week at a respectable 20.7 million bushels, there were a few positives, with a sale of HRW to Nigeria one of them, but total shipments are still 10% below last year at this time. Last Friday's USDA report, despite the lowest winter wheat plantings since 1909, had carryout increasing to a burdensome 1 billion bushels on lower feed and seed usage. U.S. wheat is still very competitive in the world, but after reaching seasonal highs, Russian wheat values have dropped about $5/mt in the past few days, with the ag minister saying that there would not be any restrictions on Russian wheat exports. It appears there will be some moisture in winter wheat areas in the next few weeks, but bitter cold temps -- some 20 to 25 degrees below normal -- are expected to hit the central Plains, with Nebraska and Kansas at risk of winterkill. DTN's National HRW Index closed at $4.71 on Monday, an average basis of 23 under Kansas City March futures.

Dana Mantini can be reached at dana.mantini@dtn.com

Follow him on Twitter @mantini_r

(CZ)

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