DTN Closing Grain Comments

Soybeans Get Unexpected Lift

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

General Comments:

Corn closed unchanged in the March contract and down 1/2 cent in the July. Soybeans closed up 11 1/4 cents in the March contract and up 10 1/2 cents in the July. Wheat closed down 3 cents in the March Chicago contract, down 3/4 cent in the March Kansas City, and up 1/4 cent in the March Minneapolis contract.

The March U.S. dollar index is down .40 at 95.54. April gold is up $55.60 at $1,250.20 while March silver is up .54 and March copper is down $.0220. The Dow Jones Industrial Average is down 352 at 15,563. March crude oil is down $.87 at $26.58. March heating oil is up .0068 while March RBOB gasoline is up $.0058 and March natural gas is down .054.

Corn:

March corn closed unchanged in spite of bullish influence from Thursday's buying in soybeans. Early Thursday, USDA said that last week's export sales and shipments of corn totaled 15.9 million bushels and 20.8 mb respectively, a bearish combination that keeps total sales and shipments in 2015-16 down 26% from a year ago. Top customers in this lower week of sales were Japan, Colombia, and Mexico. Later, USDA announced that 6.0 mb (152,400 metric tons) of U.S. corn were sold to unknown destinations for 2015-16, but much more is needed to help corn prices. USDA's new estimate of the U.S. ending stocks-to-use ratio at 13.6% is not excessive, but so far in 2016, there has been no reason for anyone to believe that supplies are going to tighten anytime soon, and that is keeping prices under bearish pressure. DTN's National Corn Index closed at $3.37 Wednesday, priced 23 cents below the March contract and will stay below the 200-day average on Thursday evening. In outside markets, the U.S. dollar index is down .40 after investors were rattled overnight by big losses in European bank stocks.

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Soybeans:

March soybeans closed higher Thursday, helped by commercial buying in soybean oil and after April palm oil ended up over 1% overnight. Supporting the move, a USDA attache report reduced its estimate of Indonesia's ending palm oil stocks in 2015-16 from 1,506,000 mt to 500,000 mt, the result of stronger-than-expected demand. Aside from the move in soybean oil, the best way to explain Thursday's buying in soybeans may be to say that it's China's year of the Red Fire Monkey as this seems curious in the face of bearish fundamentals. Early Thursday, USDA said that last week's sales and shipments of soybeans totaled 24.5 mb and 48.6 mb respectively. An improvement from the previous week but still supporting a bearish overall pace of shipments, which is down 12% from a year ago in 2015-16. Not surprisingly, China was the top customer, but total shipments to China in 2015-16 are down 13% from a year ago while South America's crops are looking generally favorable. Brazil's harvest will be assisted by mostly dry weather until Monday. Parts of Argentina remain dry, but have another chance for helpful showers on Friday and Saturday. March soybeans continue to trade stubbornly within their sideways range. DTN's National Soybean Index closed at $8.14 Wednesday, priced 48 cents below the March contract and has been below the 200-day average since mid-August.

Wheat:

March Chicago wheat closed lower Thursday, a partial unwinding of Wednesday's commercial buying. USDA said early Thursday that last week's sales and shipments of wheat totaled 9.7 mb and 13.8 mb respectively, with Mexico listed as the top customer. While it is tempting for wheat bulls to cheer sales that were over three times higher than the previous week, it just shows how low expectations have become as total sales and shipments in 2015-16 are down 18% from the previous year, on track for the lowest export total in several decades. There are concerns about how the winter wheat will look this spring in areas of Ukraine, Russia, and the U.S., but so far prices are unresponsive and continue to trade roughly sideways at a very cheap level. DTN's National SRW Wheat Index closed at $4.20 Wednesday, priced 41 cents below the March contract and still below the 200-day average. DTN's National HRW Wheat Index closed at $3.88 Wednesday, 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