DTN Before The Bell Grain Comments

South American Crops Press Grains Lower

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
Connect with Todd:
(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

March corn was down 1 3/4 cents, March soybeans were down 2 1/2 cents, and March Chicago wheat was down 2 3/4 cents. At 8 a.m., USDA announced that Mexico bought 100,000 metric tons (3.9 mb) of U.S. corn for 2015-16. Before the announcement, all three grains were lower after Argentina received beneficial rain over the weekend with more expected on Monday.

Other Markets:

Dow Jones: Lower
U.S. Dollar Index: Higher
Gold: Higher
Crude Oil: Lower

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

Corn:

At 8 a.m., USDA announced that Mexico bought 100,000 metric tons (3.9 mb) of U.S. corn for 2015-16. Before the announcement, March corn was lower early Monday after Argentina received beneficial rain over the weekend and is expecting more early this week. Not much grain is likely to move in the Midwest on Monday with a blizzard warning in Iowa and southern Minnesota and wind advisories all the way down to Louisiana. The north-central U.S. will be cold this week while the southern Plains stays mild to warm. In spite of the favorable weather in South America, investors are slightly bullish on corn. Friday's CFTC data showed noncommercial net longs in corn at 25,730 as of Feb. 2, up 25,052 from the previous week. Commercials reduced their net longs from 41,138 to 16,437, taking advantage of corn's six-week high. March corn remains under bearish pressure as prices continue to probe for long-term support. DTN's National Corn Index closed at $3.42 Friday, below the 200-day average and priced 23 cents below the March contract. In outside markets, the U.S. dollar index is up .34, offering a haven for investors while stock markets are trading lower.

Soybeans:

March soybeans were lower early Monday, pressured by weekend rain in Argentina and low export expectations during China's New Year celebration. Brazil is expecting light, scattered showers this week, but harvest should be making good progress in the north. Argentina will receive more rain Monday and then is expected to turn drier the rest of the week with highs in the mid-80s, favorable for pod-filling soybeans. With South America on track for another round of big harvests, investors in soybeans are staying moderately bearish. Friday's CFTC data showed noncommercial net shorts in soybeans at 40,527 as of Feb. 2, up just 23 from the previous week. Commercials reduced their net longs slightly, from 53,445 to 51,668. March soybeans remain under bearish pressure and are getting closer to challenging their November low of $8.47. DTN's National Soybean Index closed at $8.20 Friday, still below the 200-day average and priced 48 cents below the March contract.

Wheat:

March Chicago wheat was lower early Monday, influenced by corn, but also facing the likelihood of another increase in USDA's estimate of U.S. ending wheat stocks in Tuesday's WASDE report. It is no secret that U.S. wheat exports have been painfully slow and there is no sign of that changing anytime soon. There may be some crop issues to note this spring, but with so much U.S. wheat available, potential buyers are in no rush to jump in. The standoff in wheat remains with investors bearish and commercials offering support at wheat's cheaper prices. Friday's CFTC data showed noncommercial net shorts in Chicago wheat at 56,007 as of Feb. 2, up 264 from the previous week. Commercials reduced their net longs from 58,155 to 57,350. March Chicago wheat continues to trade within its sideways range, but still remains under bearish pressure. DTN's National SRW Wheat Index contract closed at $4.25 Friday, below the 200-day average and 42 cents below the March contract.

Todd Hultmancan be reached at todd.hultman@dtn.com

FollowTodd on Twitter @ToddHultman1

(KA)

P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]

Todd Hultman