DTN Closing Grain Comments

More New Lows for Winter Wheat

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

General Comments:

March corn closed up 1 cent per bushel and December corn was up 1 3/4 cents. March soybeans closed up 1 3/4 cents and November soybeans were up 2 3/4 cents. May Kansas City wheat closed down 10 1/4 cents, May Chicago wheat was down 8 cents and May Minneapolis wheat was down 7 cents.

The March U.S. dollar index is trading up 0.041 at 96.390. The Dow Jones Industrial Average is up 6.54 points at 25,897.86. April gold is down $4.00 at $1,340.80, March silver is up $0.05 at $16.02 and March copper is up $0.0380 at $2.9125. April crude oil is up $0.83 at $57.28, April heating oil is up $0.0250, April RBOB is up $0.0267 and April natural gas is down $0.020.

Corn:

March corn tried to trade higher early but ended just a penny higher at $3.70 3/4 Wednesday. Dow Jones quoted President Donald Trump late Tuesday as saying China would be "buying a lot more than anyone thought possible," referring to U.S. corn. However, after grains were hit by heavy selling Tuesday, Wednesday's market was in no mood to trade significantly higher. It is also not helping corn prices that the latest seven-day forecast is looking favorable for South American crops, with broad rain coverage expected across Brazil. USDA's annual Agricultural Outlook Forum starts Thursday, weather permitting, in Arlington, Virginia, and the traditional new-crop outlook is expected to be released Friday morning, roughly the same time USDA will release five weeks of export sales data that was delayed as a result of the government shutdown. While traders brace for the release of Friday's new numbers, March corn futures are holding sideways, a little above the November low of $3.67 1/4. 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 $3.43 Tuesday, priced 27 cents below the March contract. In outside markets, the March U.S. dollar index is up 0.04 and most non-ag commodities are trading higher.

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Soybeans:

March soybeans fought back from an earlier loss to end up 1 3/4 cents Wednesday at $9.02 1/2. February trading remains lackluster, but prices are still maintaining a sideways range in the futures contract. Since hearing from the CFTC on Tuesday that noncommercials switched to slightly net-long in soybeans as of Jan. 29, soybeans have sold lower and probably lost some of the new noncommercial support for the long side of the market. As with corn, it is not helping soybean prices to hear that crops are doing well in Argentina or that February soybean exports have picked up in Brazil. The big uncertainty in this market continues to be whether China will be a willing buyer of U.S. soybeans anytime soon, and trade negotiations are still unresolved. According to earlier reports on CNBC, President Trump is expected to make a decision Friday about the possibility of further tariffs after his advisors report on this week's talks. With a lot riding on the trade issue with China, cash soybean prices remain in a sideways trend, staying shy of their eight-month high at $8.41. DTN's National Soybean Index closed at $8.15 Tuesday, priced 86 cents below the March contract.

Wheat:

May K.C. wheat dropped another 10 1/4 cents Wednesday to $4.58, the second consecutive day of new contract lows. Wednesday's higher trading volume suggests active selling among noncommercials, while potential buyers have been largely absent. The fact that the selling started early among new-crop contracts points to concerns about increased world wheat production in 2019. Of course, it is still too early in 2019 to rule out a surprise, but it is fair to say that the early bearish outlook is taking back a significant part of wheat's 2018 gain, made possible by lower world production in 2018. The other concern pressuring U.S. wheat prices is the painfully slow pace of export sales USDA has provided as of Jan. 3. On Friday, the most recent five weeks of export sales data will be released and the current expectation is that the numbers will not be enough to stave off expectations for a higher U.S. ending wheat stocks estimate before the current 2018-19 season ends on May 31. For now, the trends in cash HRW and SRW wheat are down, while the trend in HRS wheat remains sideways. DTN's National HRW index closed at $4.41 Tuesday, 20 cents under the March contract and down from its highest prices in five months. DTN's National SRW index closed at $4.65, down from its highest prices in six months.

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

Follow him on Twitter @ToddHultman

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Todd Hultman