DTN Before The Bell Grain Comments

Grains Quiet, Japan Buys New-Crop Corn

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

Morning CME Globex Update:

March corn was down 1 1/2 cents, March soybeans were up 1 1/2 cents, and March Chicago wheat was down 1/4 cent. At 8 a.m., USDA announced that Japan bought 243,000 metric tons (9.6 mb) of U.S. corn for 2016-17. Before the announcement, grains were quiet and mixed overnight, digesting Tuesday's new USDA estimates, but not showing much reaction.

Other Markets:

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

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Corn:

At 8 a.m., USDA announced that Japan bought 243,000 metric tons (9.6 mb) of U.S. corn for 2016-17. Before the announcement, March corn was moderately lower, still digesting Tuesday's higher U.S. ending stocks estimate of 1.837 billion bushels or 13.6% of annual use. Tuesday's higher crop estimates for Brazil and Argentina were the most bearish aspects of USDA's latest numbers and led to this headline in USDA's World Markets and Trade report, "South American Competition Limits U.S. Corn Exports." In a nutshell, that sums up the challenge facing U.S. corn prices and is why March corn remains under bearish pressure even as U.S. prices are near their lowest level in over five years. So far, March corn continues to trade within its sideways range, helped by the competitiveness of cheap U.S. corn prices. DTN's National Corn Index closed at $3.38 Tuesday, below the 200-day average and priced 23 cents below the March contract. In outside markets, the U.S. dollar index is up .23 after RTTNews.com reported that Fed Chairman Yellen explained to Congress that federal funds rates were on no pre-determined path.

Soybeans:

March soybeans were a little higher early Wednesday, absorbing Tuesday's bearish increase in Argentina's soybean crop estimate with little sign of surprise. The obvious bearish concern facing soybean prices is that all clues point to Brazil and Argentina having another season of successful soybean harvests. DTN's five-day forecast continues to look favorable with chances for light, scattered showers in Brazil and more chances for rain in Argentina on Friday and Saturday. Until last weekend, Argentina was on the dry side, but highs in the 80s this week will not exploit any dryness. With upcoming harvests looking big down south, China is in no hurry to buy soybeans which means that March soybeans remain under bearish pressure. DTN's National Soybean Index closed at $8.15 Tuesday, still below the 200-day average and priced 48 cents below the March contract.

Wheat:

March Chicago wheat was slightly lower early, reluctant to trade below the January low of $4.56 even with all the obvious bearishness of this market in view. USDA's estimate of U.S. ending stocks is now near 50% of annual use and exports are not likely to pick up anytime soon. It seems highly likely that sometime, this market will find an excuse to punish bearish investors for being heavily short at such a cheap price, but so far, there is no trigger to make that happen. DTN's five-day forecast continues to expect beneficial moisture in the Pacific Northwest and light amounts in the Midwest, but the Southern Plains remains dry with red flag warnings around the Texas Panhandle. March Chicago wheat continues to trade roughly sideways, thanks to active commercial support at these extremely cheap prices. DTN's National SRW Wheat Index contract closed at $4.16 Tuesday, below the 200-day average and 41 cents below the March contract.

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

FollowTodd on Twitter @ToddHultman1

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Todd Hultman