DTN Closing Grain Comments

Row Crops Eerily Quiet, Wheat Ends Higher

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

General Comments:

Corn closed down 3/4 cent in the March contract and down 3/4 cent in the July. Soybeans closed down 1 cent in the March contract and down 1/2 cent in the July. Wheat closed up 3 3/4 cents in the March Chicago contract, down 1/4 cent in the March Kansas City, and down 1 1/2 cents in the March Minneapolis contract.

The March U.S. dollar index is up .04 at 96.13. April gold is down $6.00 at $1,192.60 while March silver is down .19 and March copper is down $.0195. The Dow Jones Industrial Average is up 42 at 16,056. March crude oil is down $.41 at $27.53. March heating oil is up .0051 while March RBOB gasoline is up $.0538 and March natural gas is down .051.

Corn:

March corn closed slightly lower Wednesday with a confusing mix of news to untangle. Early Wednesday. USDA announced that Japan bought 9.6 million bushels (243,000 metric tons) of U.S. corn for 2016-17. While the new-crop sale is a good sign that U.S. prices are competitive, more old-crop sales are needed as the demand for corn is struggling. Informa Economics reported that POET is cutting corn-receiving hours at its ethanol plants in Indiana and Ohio. Later, the U.S. Energy Information Administration said that ethanol inventory hit a new record high last week of 23.0 million barrels while production was a little higher, at 969,000 barrels per day. On the more bullish side, USDA's attache in Argentina estimated the corn crop at 24.0 million metric tons, just one day after USDA boosted its official estimate to 27.0 mmt. To explain the difference, the attache said that most analysts expect plantings to be down 5% to 15% from a year ago. If true, Argentina's 24.0 mmt crop estimate is not necessarily bullish, but it would ease some of corn's more bearish concerns. March corn continues to trade within its sideways range with potential buyers finding no urgent reason to jump in. DTN's National Corn Index closed at $3.38 Tuesday, priced 23 cents below the March contract and will stay below the 200-day average on Wednesday evening. In outside markets, the U.S. dollar index is up .04, unfazed by Fed Chairman Yellen's comments to Congress that conditions have become "less supportive to growth," as reported by RTTNews.com. March crude oil is trading down 54 cents, just below its January low.

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Soybeans:

March soybeans closed slightly lower Wednesday in quiet trading with neither side of the market too enthused about pushing prices either direction. The main point of Tuesday's USDA report for soybeans was that USDA continues to expect successful harvests out of South America -- a bearish elephant weighing on prices that is too big to ignore. The one bright spot in the soybean complex lately has been March soybean oil, currently holding above its 200-day average. Informa Economics reported that Malaysia's palm oil stocks are at their lowest level in six months. While that is not bullish enough to significantly lift soybean prices, oil's higher prices are helping provide a better return for crush activity. March soybeans remain under bearish pressure, but are also able to hold within their sideways range so far, thanks to modest commercial support at these lower prices.DTN's National Soybean Index closed at $8.15 Tuesday, priced 48 cents below the March contract and has been below the 200-day average since mid-August.

Wheat:

March Chicago wheat closed higher Wednesday, once again rescued from the threat of new contract lows by commercial bargain-hunters. Everyone knows that exports are dismal, but it was nice to hear Informa Economics report that Japan bought 54,400 metric tons (mt) of U.S. food wheat from the U.S., 61,800 mt from Australia, and 29,800 mt from Canada for Mar./Apr. shipment. With USDA estimating U.S. ending wheat stocks just shy of 50% of annual use, much more business is needed and marginal concerns about winter wheat conditions don't seem serious enough yet to motivate potential buyers. March Chicago wheat continues to trade roughly sideways with active commercial support at these cheap levels. DTN's National SRW Wheat Index closed at $4.16 Tuesday, priced 41 cents below the March contract and still below the 200-day average. DTN's National HRW Wheat Index closed at $3.89 Tuesday, the lowest in over five years.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman