DTN Closing Grain Comments

Grains Lower Ahead of USDA Reports

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

General Comments:

Corn closed down 3 1/2 cents in the March contract and down 3 3/4 cents in the July. Soybeans closed down 5 cents in the March contract and down 5 1/4 cents in the July. Wheat closed down 8 1/4 cents in the March Chicago contract, down 8 1/2 cents in the March Kansas City, and down 5 cents in the March Minneapolis contract.

The March U.S. dollar index is down .34 at 96.71. April gold is up $40.00 at $1,197.70 while March silver is up .64 and March copper is down $.0135. The Dow Jones Industrial Average is down 384 at 15,821. March crude oil is down $.89 at $30.00. March heating oil is down .0068 while March RBOB gasoline is down $.0256 and March natural gas is up .068.

Corn:

March corn closed lower Monday for the fourth consecutive day after Argentina's main crop areas received one to three inches of rain over the weekend, especially good timing for row crops. USDA did report that Mexico bought 3.9 million bushels (100,000 mt) of U.S. corn for 2015-16, but it was not enough to stem the tide of bearish concerns that are plaguing grains at the moment. Monday morning, USDA said that last week's inspections of corn for export totaled 17.3 million bushels, a bearish amount that put the 2015-16 total down 21% from a year ago. Even though it is hard to understand why, 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. With South America's crops looking generally favorable, March corn remains under bearish pressure with USDA also likely to raise both, U.S. and world estimates of ending stocks in Tuesday's WASDE report. DTN's National Corn Index closed at $3.42 Friday, priced 23 cents below the March contract and will stay below the 200-day average on Monday evening. In outside markets, the U.S. dollar index is down .34 with U.S. interest rate increases looking less likely in 2016.

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Soybeans:

March soybeans closed lower for a fourth consecutive day after Argentina received beneficial rains for pod-filling soybeans. In spite of earlier concerns of dryness in both, Brazil and Argentina, this year's rains came through when needed and it seems more likely each week that both countries are on their way to successful row crop harvests. Tuesday's WASDE report may not show much change in USDA's estimate of U.S. ending stocks, but many will be watching the estimates for Brazil and Argentina and increases are possible. Investors remain moderately bearish as 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, but are still attracted to soybeans' low prices. USDA said that last week's inspections of soybeans for export totaled 43.1 million bushels, a bearish amount that put the total for 2015-16 down 13% from a year ago. 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, priced 48 cents below the March contract and has been below the 200-day average since mid-August.

Wheat:

March Chicago wheat closed lower Monday as USDA is apt to increase its estimate of U.S. ending wheat stocks in Tuesday's report. It is no secret that wheat exports have been lower-than-expected and USDA's report that last week's inspections of wheat totaled 14.6 million bushels gave traders one more bearish reminder. Soft winter wheat areas are in for single-digit temperatures this week, but the Southern Plains will remain mild to warm with no major threats seen. The standoff in wheat continues as 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, but are still providing support, attracted by wheat's cheaper prices. March K.C. wheat fell to a new contract low Monday, pressured by hard red winter exports that are down 23% from a year ago. DTN's National SRW Wheat Index closed at $4.25 Friday, priced 42 cents below the March contract and still below the 200-day average. DTN's National HRW Wheat Index closed at $3.97 Friday, staying below the 200-day average since July.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman