DTN Before The Bell Grain Comments

Grains Higher, But Exports Still Bearish

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

March corn was up 2 1/4 cents, March soybeans were up 1 cent, and March Chicago wheat was up 1 cent. Grains were moderately higher early Thursday, helped by a fourth consecutive day of lower trading in the U.S. dollar. USDA's weekly report of export sales was bearish for all three grains, reminding markets of last week's cancelled soybean sale to China.

Other Markets:

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

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Corn:

March corn was higher early Thursday with help from the U.S. dollar index trading at its lowest prices in over three months. Travel will resume throughout the Midwest as temperatures gradually warm into the weekend and there may be temptation to move some corn with prices near their highest level in over six weeks, but the offers are still too low for many. Early Thursday, USDA said that last week's sales and shipments of corn totaled 44.5 and 26.0 million bushels, up from a week ago, but still sporting a bearish combined total for 2015-16 that is down 25% from a year ago. Even so, it is encouraging to see increased sales, a confirmation that U.S. prices are competitive again. March corn continues to trade within its sideways range and appears to be finding long-term support. DTN's National Corn Index closed at $3.48 Wednesday, slightly below the 200-day average and priced 23 cents below the March contract. In outside markets, the U.S. dollar index is trading down .75 ahead of Friday's U.S. unemployment report.

Soybeans:

March soybeans were a little higher early, helped by the early combination of a lower U.S. dollar and higher Brazilian real. USDA said early Thursday that last week's sales and shipments of soybeans totaled -1.6 and 41.9 million bushels, no surprise after the cancellation from China announced a week ago. The larger bearish concern is that the cancelled sale may be a sign that China is content to wait for lower prices as South America's harvest picks up in the next month. So far, crop conditions remain generally favorable with rain expected to ease stress in Argentina on Sunday and Monday. March soybeans remain under bearish pressure, but also continue to hold in their sideways trading range, thanks to active commercial demand at the lower end of the range. DTN's National Soybean Index closed at $8.30 Wednesday, still below the 200-day average and priced 47 cents below the March contract.

Wheat:

March Chicago wheat was a little higher early with commercials encouraged by a new three-month low in the U.S. dollar index. At some point, U.S. wheat prices are likely to adjust to last year's currency shifts just as we are seeing in corn, but so far there is no sign of that happening. USDA said early Thursday that last week's export sales and shipments totaled just 2.4 and 8.5 million bushels respectively, a bearish combination that has total exports down 15% in 2015-16 from last year's slow pace. DTN's five-day forecast expects more moisture in the Pacific Northwest, but is mostly dry for the rest of winter wheat country. Statistics Canada said that there were 20.68 mmt of total wheat stocks as of December 2015, down 19% from a year ago, but within the range of expectations. March Chicago wheat remains under bearish pressure, but prices are holding sideways with active commercial support. DTN's National SRW Wheat Index contract closed at $4.44 Wednesday, below the 200-day average and 36 cents below the March contract.

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

FollowTodd on Twitter @ToddHultman1

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Todd Hultman