DTN Before The Bell Grain Comments

Morning CME Globex Update:

March corn was up 2 1/4 cents, January soybeans were up 4 1/4 cents, and March Chicago wheat was up 4 cents. All three grains were higher early Tuesday, helped by EPA's release of ethanol mandates and increased commercial net-longs in Monday's Commitment of Traders report. The U.S. dollar index is moderately lower after Europe's unemployment rate improved to its lowest level in nearly four years.

Other Markets:

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

Corn:

March corn was higher early Tuesday helped by more commercial buying after the Environmental Protection Agency (EPA) finally released ethanol mandates that turned out to be a little more than those proposed in May. EPA's corn-based ethanol mandate of 14.27 billion gallons for 2016 means that USDA may reduce its U.S. ending stocks estimate by roughly 150 to 200 million bushels for 2015-16. Monday's CFTC data showed noncommercials turned from net long to net short 20,047 contracts. Commercial net-longs, however, increased from 29,812 to 59,929 contracts, a recognition that prices are offering good economic value. The hope for corn in the months ahead is that farmer sales will remain low and demand will be good enough to persuade commercials to pay up to secure supplies. March corn continues to trade within its sideways range. DTN's National Corn Index closed at $3.46 Monday, below the 200-day average and priced 26 cents below the March contract. In outside markets, the U.S. dollar index is down .19 after Europe's unemployment rate fell to 10.7% in October, its lowest level in nearly four years, reported RTTNews.com. There were no deliveries of December corn reported early Tuesday.

Soybeans:

January soybeans were higher early Tuesday, continuing the climb that began with an outside reversal posted eight days ago. The renewed interest for soybeans is being helped by comments from Argentina's next ag minister that the soybean export tax will be reduced gradually (see Monday's DTN article, "Argentina to Cut Soybean Export Tax by 5 Points" by Alastair Stewart). Also, commercials are getting bolder about responding to soybeans' low prices. Monday's CFTC data showed noncommercial net-shorts in soybeans at 36,059, up 8,973 from the previous week. Commercial net-longs increased from 36,900 to 43,688. China's level of demand remains the big unknown factor for prices, but so far, January soybeans are doing well to hold their sideways range of the past three months. DTN's National Soybean Index closed at $8.36 Monday, below the 200-day average and priced 45 cents below the January contract. There were 695 contracts of December soybean oil delivered early Tuesday, but no deliveries of meal.

Wheat:

March Chicago wheat was higher early, helped by light commercial buying which seems to be ignoring a second day of large deliveries. Monday's CFTC data showed noncommercial net-shorts in Chicago wheat at 47,301 as of Nov. 24, up 1,121 from the previous week. Commercial net-longs slipped from 56,290 to 54,254, but continue to provide support at these cheap prices. It is impressive that wheat is able to maintain its sideways range with almost a billion bushels of ending supplies and minimal exports, but that is another testament to how cheap prices have gotten. The fact that commercials remain loyally net long is a supportive sign that domestic demand for wheat remains active. DTN's National SRW Wheat Index contract closed at $4.23 Monday, below the 200-day average and 53 cents below the March contract. There were 1,517 deliveries of December Chicago wheat and 83 deliveries of December K.C. wheat early Tuesday.

Todd Hultmancan be reached at todd.hultman@dtn.com

FollowTodd on Twitter @ToddHultman1

(KA)

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