DTN Early Word Grains

Grains Resist Outside Concerns

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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6:00 a.m. CME Globex:

March corn was 1/4 cent lower, March soybeans were 1 3/4 cents higher, and March Chicago wheat was 1 3/4 cents higher.

CME Globex Recap:

Grains were mixed early Thursday in spite of a sell-off in European bank stocks after Societe Generale reported disappointing earnings. Selling spread through U.S. and European stock markets, negatively affected crude oil, and may still exert a bearish influence on grain prices later Thursday.

OUTSIDE MARKETS:

The Dow Jones Industrial Average closed 99.64 points lower at 15,914.74, the NASDAQ Composite was up 14.83 points at 4,283.59, and the S&P 500 fell .35 to close at 1,851.86 Wednesday. DJIA futures were 317 points lower overnight. Asian markets were mostly lower with the Nikkei down another 390 points (2.5%). European markets were lower with London's FTSE 100 down 119 points (2.1%). The U.S. dollar index was 0.37 lower at 95.52. Crude oil was down $0.97 at $26.48 while Brent crude was down $0.43 to $30.41. April gold was $32.40 higher at $1,227.00. Malaysian palm oil futures were up 1.1%.

BULL BEAR
1) U.S. corn prices are cheap enough to be competitive again vs. Brazil. 1) Nearly every adjustment in USDA's February report was bearish for grains.
2) In spite of bearish outlooks, row crop prices have held above January's lows so far. 2) USDA's crop estimates for South America point to large upcoming corn and soybean harvests.
3) February's drop in the U.S. dollar takes some bearish pressure off of grain prices. 3) U.S. ending wheat stocks are at their highest level in six years.

See Grain Archives for more information on the fundamental situation in grains. See the DTN Ag Weather Brief for complete market weather comments.

MORE COMMODITY-SPECIFIC COMMENTS

CORN March corn was slightly lower overnight, not seeing much impact from Europe's financial problems, at least yet. Thursday's weather map is mostly dry except for light snow in the Dakotas. High temperatures will be mild to unusually warm in the western and southern Plains. March corn has pulled back from last attempt at making a new six-week high and is staying within its sideways range. The main bearish concerns at this time are the favorable weather conditions in South America and the nervousness of outside financial markets.

SOYBEANS March soybeans were moderately higher early Thursday and it seems somewhat remarkable that prices have held roughly sideways since late-August, considering how good the U.S. harvest was in the fall and how, once again, we are facing the prospect of another record soybean crop from Brazil. Thursday morning's export sales report will likely be disappointingly bearish for soybeans as China is also well aware of South America's favorable crop conditions. Soybeans remain under bearish pressure, but have been helped by moderate commercial buying interest.

WHEAT Winter wheat contracts were a little higher early Thursday, helped by light noncommercial buying to start the day, most likely short-covering. There is no bullish fundament argument to make for wheat prices at this time and abundant U.S. supplies are no secret to anyone. Thursday morning's USDA report will be watched for any sign of improvement in the export pace, but expectations are low and there has been no evidence of that so far. March Chicago wheat continues to trade roughly sideways and is holding above the January low of $4.56 with help from the commercial sector.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.37 -$0.01 -$0.23 Mar -$0.005
Soybeans: $8.14 -$0.01 -$0.48 Mar -$0.001
SRW Wheat: $4.20 $0.04 -$0.41 Mar $0.002
HRW Wheat: $3.88 -$0.01 -$0.57 Mar -$0.006
HRS Wheat: $4.61 -$0.03 -$0.25 Mar -$0.013

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

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Todd Hultman