DTN Closing Grain Comments

Grains Sag Lower on the Week

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

General Comments:

Corn closed down 2 3/4 cents in the March and down 2 3/4 cents in the July. Soybeans closed down 7 cents in the March and down 6 cents in the July. Wheat closed down 6 cents in the March Chicago, down 5 3/4 cents in the March Kansas City, and down 3 1/4 cents in the March Minneapolis.

The March U.S. dollar index is up .56 at 97.05. April gold is up $1.70 at $1,159.20 while March silver is down .06 and March copper is down $.0415. The Dow Jones Industrial Average is down 258 at 16,158. March crude oil is down $.53 at $31.19. March heating oil is $.0139 lower, March RBOB gasoline is $.0302 lower, and March natural gas is $0.086 higher.

For the week:

March corn closed down 6 1/4 cents while July closed down 5 1/2 cents. March soybeans were down 14 3/4 cents while the July was down 12 1/4 cents. March Chicago wheat was down 12 1/2 cents, March Kansas City wheat was down 18 cents, and March Minneapolis wheat was down 8 3/4 cents.

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Corn:

March corn closed lower Friday and for the week as favorable row-crop conditions in South America support ideas that USDA's crop estimates in Tuesday's WASDE report will be at least as large as a month ago, if not larger. USDA's Foreign Ag Service reported Friday that U.S. ethanol exports were up 4% in December from a year ago while total 2015 exports were up slightly. U.S. exports of distillers grains were up 11% in 2015 with Chinese purchases up 45% from a year ago -- a bullish factor for corn and soybean prices as it reflects their ongoing appetite for more protein. March corn remains under bearish pressure as prices continue to probe for long-term support. DTN's National Corn Index closed at $3.45 Thursday, priced 23 cents below the March contract and still below the 200-day average. In outside markets, the U.S. dollar index is up .56 after the U.S. Labor Department said that the unemployment rate fell from 5.0% to 4.9%, the lowest in eight years. Non-farm payrolls were up 151,000, less than expected.

Soybeans:

March soybeans closed lower Friday and for the week with Argentina expecting 1 to 3 inches of rain in the next five days -- a beneficial development for row crops in the northern-equivalent month of August. USDA's attache in Argentina increased the soybean crop estimate from 57.0 to 58.5 million metric ton -- a number that USDA may or may not accept on Tuesday. If nothing else, the high crop estimates that we have heard for South America this week raise bearish concerns that another successful harvest is on the way for both Brazil and Argentina since there is no significant weather concern at this time. While the supply side of the market looks bearish, the demand side remains active. In addition to the big sales of distillers grains mentioned above, USDA's Foreign Ag Service also reported that U.S. biodiesel exports in December were more than double a year ago, thanks to a big purchase from Mexico. Overall, March soybeans remain under bearish pressure, but prices continue to trade within their sideways range, thanks to active commercial interest at the lower end of the range. DTN's National Soybean Index closed at $8.27 Thursday, priced 47 cents below the March contract and still below the 200-day average.

Wheat:

March Chicago wheat closed lower Friday and for the week with no bullish arguments to help lift prices. USDA's estimate of ending wheat stocks is likely to go up in Tuesday's report as exports have not kept pace. Even though a higher stocks estimate will not be a surprise to market watchers, the lack of any bullish concern this winter is putting all the heavy lifting of supporting prices on commercials' shoulders and they may be excused for taking a break now and then. There will be some concerns to watch for when crops emerge this spring, but until then there is no significant threat to wheat supplies on the horizon. March Chicago wheat continues to trade roughly sideways, caught in a standoff between bearish investors and commercials attracted by wheat's cheap prices. DTN's National SRW Wheat Index contract closed at $4.31 Thursday, priced 41 cents below the March contract and below the 200-day average. DTN's National HRW Index closed at $4.05, staying below the 200-day average since early July.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman