DTN Closing Grain Comments

Soybeans Push Higher, Eyes on Brazil

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

General Comments:

Corn closed up 1 1/2 cents in the March contract and up 3/4 cent in the July. Soybeans closed up 8 1/4 cents in the January contract and up 8 1/4 cents in the July. Wheat closed down 4 cents in the March Chicago contract, down 3 3/4 cents in the March Kansas City, and down 1/4 cent in the March Minneapolis contract.

The December U.S. dollar index is down .35 at 99.86. February gold is up $1.40 at $1,066.70 while March silver is up $.01 and March copper is up $.0255. The Dow Jones Industrial Average is up 111 at 17,831. January crude oil is down $.07 at $41.58. January heating oil is up .0117 while January RBOB gasoline is up $.0552 and January natural gas is down .006.

Corn:

March corn closed a little higher Tuesday on light volume, helped by late news from EPA Monday that the mandate for corn-based ethanol would total 14.27 billion gallons in 2016, a little more than proposed in May. The new mandate should result in a 150 to 200 million bushel reduction in USDA's estimate of U.S. ending corn stocks and help to buffer the bearish effect of slow exports. Monday's CFTC data showed noncommercials gave up on their long positions and turned net-short 20,047 contracts as of Nov. 24. Commercial net-longs, however, increased from 29,812 to 59,929 contracts, confirmation that corn is offering good economic value at these lower prices. March corn continues to trade within its sideways range, thanks to increased commercial support near contract lows. DTN's National Corn Index closed at $3.46 Monday, priced 26 cents below the March contract and will stay below the 200-day average on Tuesday evening. In outside markets, the December U.S. dollar index is down .35 after Europe reported its lowest unemployment rate in almost four years. There have been no deliveries of December corn reported yet.

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Soybeans:

January soybeans closed higher Tuesday, helped by commercial buying in soybean oil and more buying interest in soybeans since the outside reversal was posted eight days ago. Monday's CFTC data showed noncommercial net-shorts in soybeans at 36,059 as of Nov. 24, the same time that commercial net-longs increased from 36,900 to 43,688. For a while, it seemed curious that commercials were increasing net-longs as many worried about new soybean supplies from Argentina, but Argentina's new ag minister is said to be favoring a slow reduction in the soybean export tax that will not be so burdensome to soybean prices (see Monday's DTN article, "Argentina to Cut Soybean Export Tax by 5 Points" by Alastair Stewart). Meanwhile, the five-day forecast shows chances for flooding in southern Brazil, lighter rain amounts for central Brazil and Argentina. January soybeans have survived November's attempt at a new contract low and is holding sideways. DTN's National Soybean Index closed at $8.36 Monday, priced 45 cents below the January contract and below the 200-day average. There were 695 contracts of December soybean oil delivered early Tuesday, but no deliveries of meal.

Wheat:

March Chicago wheat closed lower Tuesday, near its contract low with a second day of bearish pressure from 1,517 delivery notices in December Chicago wheat early Tuesday. Monday's CFTC data showed noncommercial net-shorts in Chicago wheat at 47,301 as of Nov. 24. Commercial net-longs slipped from 56,290 to 54,254, but continue to provide support at these cheap prices. Late Monday, USDA increased its good-to-excellent rating for U.S. winter wheat from 53% to 55%, the final rating of 2015. Due to dry weather, Informa Economics reported that Australia's government lowered its estimate of the wheat crop to 24.0 million metric tons, suggesting that USDA may lower its 26.0 mmt estimate for Australia. March Chicago wheat remains under bearish pressure but is doing well to stay sideways with help from commercials. DTN's National SRW Wheat Index closed at $4.23 Monday, priced 53 cents below the March contract and will remain below the 200-day average on Tuesday evening. DTN's National HRW Wheat Index closed at $4.08 Monday, up from its 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