DTN Closing Grain Comments

Crop Prices Tumble on Low Volume

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

General Comments:

May corn closed down 3 1/4 cents per bushel and December corn was down 2 1/4 cents. May soybeans closed down 11 3/4 cents and November soybeans were down 11 1/2 cents. May K.C. wheat closed down 12 3/4 cents, May Chicago wheat was down 12 3/4 cents and May Minneapolis wheat was down 2 1/2 cents. The March U.S. dollar index is trading up 0.015 at 96.810. The Dow Jones Industrial Average is down 103.42 points at 25,703.21. April gold is up $1.70 at $1,286.40, May silver is down $0.03 at $15.08 and May copper is down $0.0110 at $2.9225. April crude oil is down $0.29 at $56.27, April heating oil is down $0.0015, April RBOB is up $0.0219 and April natural gas is down $0.037.

Corn:

May corn closed down 3 1/4 cents at $3.72 1/2 Wednesday, showing a lack of buying interest two days before USDA's next WASDE report is released Friday. May futures prices look more bearish than cash corn prices and could possibly challenge the September low of $3.63 1/4. Meanwhile cash corn prices are still roughly 40 cents above their September low. The latest seven-day forecasts for Brazil and Argentina continue to look favorable for crops and prices confirm the favorable outlooks down south. The FOB price for corn in Paranagua, Brazil, is 22 cents cheaper than the FOB price in New Orleans, a bearish sign that the U.S. is already facing tougher export competition. Friday's WASDE report is not likely to show much change from February's estimates and Brazil's corn crop estimate is expected at 94.6 mmt (3.72 bb). Here in the U.S., the Energy Department said last week's ethanol production was down slightly to 1.024 million barrels per day, while ethanol inventory climbed to 24.3 million barrels, matching its highest level on record. Ethanol did have one bright spot in 2018 as USDA reported exports were up 24% on the year. For now, the trend of cash corn prices is sideways. Deliveries in March corn have progressed quickly and there were 3,008 contracts still open early Wednesday. DTN's National Corn Index closed at $3.44 Tuesday, 32 cents below the May contract. In outside markets, the March U.S. dollar index is roughly steady, but most commodities are trading lower. The Federal Reserve's Beige Book said 10 of the 12 districts reported slight-to-moderate growth in late January and February, while the other two were flat.

Soybeans:

May soybeans fell 11 3/4 cents to $9.02 Wednesday, the lowest close in two months. Soybeans' light trade volume suggests Wednesday's losses were more the result of vanishing buying interest than any strong urge on the part of sellers. There are several reasons for potential buyers to be a little weak in the knees lately as trade talks are still uncertain and the current lack of U.S. soybean exports could lead USDA to raise its estimate of U.S. ending soybean stocks on Friday. Dow Jones' survey is expecting a small reduction in that estimate, from 910 million bushels (mb) in February to 898 mb in March. However, the range of guesses is from 852 mb to 940 mb, showing some dissent. It is possible USDA could lower its estimate of Brazil's soybean crop on Friday from February's 117.0 mmt (4.30 bb), but it is difficult for traders to get bullish, seeing Brazil's FOB soybean price trading 22 cents below the comparable price in New Orleans. For now, both cash and futures soybean prices remain in sideways trends, staying shy of their highest prices in eight months. DTN's National Soybean Index closed at $8.23 Tuesday, 91 cents below the May contract.

Wheat:

Tuesday's one-day bounce in winter wheat prices was all the market could offer as May K.C. wheat fell 12 3/4 cents Wednesday to $4.38 1/2, back near its contract low. Likewise, May Chicago wheat dropped 12 3/4 cents. Tuesday's CFTC data offered some hope prices could be getting closer to support as commercials were net long 51,286 contracts of Chicago wheat as and 13,919 contracts of K.C. wheat, both as of Feb. 26. Fundamentally, however, it is difficult to see a bullish argument for U.S. wheat prices as Friday's WASDE report is likely to show another estimate of U.S. ending wheat supplies near or above a billion bushels and not enough exports to help change that. Adding to bearish pressures, temperatures across the U.S. Southern Plains are warmer Wednesday, getting relief from the latest surge of arctic cold and looking more moderate the next ten days. With wheat supplies plentiful in the U.S. and the uncertainty of a new growing season ahead, the trends in cash HRW and SRW wheat are down, while the trend in cash HRS wheat remains sideways. DTN's National HRW Index closed at $4.30 Tuesday, 21 cents under the May contract and up from its lowest prices in a year. DTN's National SRW Index closed at $4.37, up from its lowest prices in 11 months.

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

Follow him on Twitter @ToddHultman

(CZ)

Todd Hultman