DTN Before The Bell Grain Comments

Grains Quiet, USDA On Deck

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 1/4 cent, and March Chicago wheat was up 1/2 cent. Grains were mostly quiet and mixed overnight with USDA's next WASDE report due out at 11 a.m. CST. The U.S. dollar index is trading lower as expectations ease for another U.S. rate increase.

Other Markets:

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

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

Corn:

March corn was lower early Tuesday as traders brace for a likely increase in USDA's estimate of U.S. ending corn stocks in Tuesday's WASDE report, due out at 11 a.m. CST. The problem with corn's current estimates is that U.S. exports have not kept pace with USDA's 1.7 billion bushel estimate and other estimates suggest that the crop estimates for Brazil and Argentina may be raised a little. Overall, crop conditions remain favorable in South America with another chance for rain in Argentina later this week. With corn supplies plentiful and exports down 22% from a year ago, March corn remains under bearish pressure and Tuesday's WASDE report is not expected to inspire buying. DTN's National Corn Index closed at $3.39 Monday, below the 200-day average and priced 23 cents below the March contract. In outside markets, the U.S. dollar index is down .56 to a new three-month low and March crude oil is down 19 cents.

Soybeans:

March soybeans were slightly lower early with just a three-cent overnight trading range. As for corn, Tuesday's USDA report has a chance to be bearish as crop conditions are generally favorable in both, Brazil and Argentina. Soybean exports have been running a little lower than USDA's estimated pace, but it is not clear if USDA will make any changes to their estimate of U.S. exports. Dow Jones' survey of analysts expects USDA to estimate soybean crops at 99.2 mmt for Brazil and 57.1 mmt for Argentina. Anything close to those numbers will continue to support the bearish view that lots of new soybean supplies are headed to market. So far, March soybeans continue to trade within their sideways range, above the November low of $8.47. DTN's National Soybean Index closed at $8.15 Monday, still below the 200-day average and priced 48 cents below the March contract.

Wheat:

March Chicago wheat was slightly higher early Tuesday, holding just above its contract low of $4.56 ahead of Tuesday's WASDE report. USDA's new estimates will almost certainly be bearish for wheat as U.S. exports have not kept up with USDA's estimated pace, but there is always a chance for surprise. Soft red winter wheat areas will experience cold temperatures this week, but the hard red variety continues to enjoy mild to warm temperatures in the southern Plains with highs in the 70s expected on Wednesday. March Chicago wheat prices continue to suffer from plentiful U.S. supplies and slow exports, but are so cheap that it may be dangerous to be short this spring when we get a better look at the new winter crop. DTN's National SRW Wheat Index contract closed at $4.17 Monday, below the 200-day average and 41 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