DTN Closing Grain Comments

General Comments:

March corn closed down 5 cents per bushel and December corn was down 2 1/2 cents. March soybeans closed down 6 3/4 cents and November soybeans were down 6 1/4 cents. March K.C. wheat closed down 15 3/4 cents, March Chicago wheat was down 14 1/2 cents and March Minneapolis wheat was down 17 1/2 cents. The March U.S. dollar index is trading down 0.405 at 96.335. The Dow Jones Industrial Average is up 28.40 points at 25,911.65. April gold is up $20.60 at $1,342.70, March silver is up $0.22 at $15.97 and March copper is up $0.0755 at $2.8740. March crude oil is up $0.26 at $55.85, March heating oil is down $0.0335, March RBOB is down $0.0149 and March natural gas is up $0.037.

Corn:

Corn was surprisingly firm last week despite the late-week plunge in prices of wheat and soybeans. Tuesday was another story, with corn down sharply to start the holiday-shortened week. News is scarce, with a substantial data release forthcoming later this week, as six weeks' worth of export sales, updated U.S. supply and demand projections, and USDA Outlook Forum 10-year projections are about to be unveiled. News that President Donald Trump was considering auto tariffs on EU cars did not sit well with traders on Tuesday, as the EU has been a notable buyer of both soybeans and meal this year. China inked a deal to buy Uruguayan corn as well, as they seek other sources of supply. Corn is surely being tugged by the plunging wheat market, as European and Black Sea wheat values fell hard last week, further compromising U.S. wheat export business. A look at the charts shows both March and new-crop December corn futures falling below the uptrend line that has been in place and respected since mid-September. South Korea bought a few parcels of corn late week, but optional origin. Tuesday's export inspections of 37.1 million bushels were equal to last year's and remain a solid 45% above the year ago total shipments. Weather is favorable in both Argentina, where a record large crop is expected, and in Brazil now, where soil moisture is being replenished for the safrinha corn crop, which represents roughly 71% of the total Brazilian crop this year. Rumors of Chinese buying U.S. corn continue to swirl, but we'll have to wait until Friday's export sales for some confirmation. DTN's National Corn Index closed at 3.48 on Friday and reflects an average basis of 27 under March.

Soybeans:

Soybeans fell hard again Tuesday to the lowest level since mid-January, and below the five-month uptrend line. News that the demand-dampening African swine fever continues to expand within China and also showed up on three farms in Vietnam was not good news for a market that is already struggling to move excess supply and is well behind on exports. Tuesday's export inspections on soybeans, at 37.9 million bushels, though above those of a year ago for the same week, remain 36% below a year ago on total shipments. Also pressuring soybeans was some talk of the Trump administration imposing auto tariffs on EU autos. Since the EU has been supplementing lost U.S. soy sales this year, the threat of retaliation weighed on trader's minds. U.S. soybeans are currently at a $3/mt (8 cents per bushel) premium to Brazilian beans landed in China and a $6/mt (16 cents per bushel) premium to Argentine beans landed. Last week's troublesome China and unknown soybean cancellations of close to 1.4 mmt were thought to perhaps cut into U.S. sales even more. It is being widely reported by cash-connected commission houses that China bought 25 to 35 cargoes of Brazilian soybeans last week for March to July. Weather in South America is now mostly favorable, with the Brazil soy crop thought to have stabilized in the 114 mmt to 16 mmt range. Safras and Mercado was the latest estimate and that was 115.4 mmt. Ag Resource admits they don't see Brazil's crop falling under 114 mmt. Brazil's soybean harvest is now 36% done. Also weakening soybeans is the realization that U.S. farmers are holding an above average amount of 2018 soybeans, and the farmers in Brazil, likewise, are well behind the norm in marketing their (2019) soy crop. This is a market in desperate need of some bullish information from export sales or the China trade talks later this week. DTN's National Soybean Index closed at $8.21 on Friday , 87 cents below the March futures contract.

Wheat:

Wheat continues its rapid descent, with Kansas City March futures now 50 cents per bushel under the high made on Feb. 6, and at a new contract low. World wheat values since last week have plunged, with French, Ukraine and Russian values all down hard, and cutting into U.S. competitiveness. It appears France was able to garner the entire Algerian purchase of 600,000 mt. Syria bought 200,000 mt of wheat Tuesday, with the likely origin Russia. Export inspections for the week ended Feb. 14 were once again disappointing and well under the weekly amount needed to attain the USDA projection. Export inspections were a dismal 13.1 million bushels, with total shipments of 578.6 million bushels, some 10% below a year ago. Wheat, and especially Kansas City wheat, is about as oversold as any market in quite some time. The problem is that in trending markets, it can remain oversold longer before recovering. What is amazing is how much the wheat market has broken following last Thursday's revelation of the lowest winter wheat plantings in 110 years. DTN's National HRW Index closed at $4.61 on Thursday, and that is an average basis of 21 under Kansas City March futures.

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

Follow him on Twitter @mantini_r

(CZ)

Copyright 2019 DTN/The Progressive Farmer. All rights reserved.