DTN Before The Bell Grain Comments

Morning CME Globex Update:

Corn 3/4 lower. Soybeans 1 3/4 lower. Wheat 2 1/2 higher. Even the outside markets are hugging previous price ranges after Thursday's turmoil. As traders close out positions ahead of a three-day holiday weekend, most markets show a corrective uptick. Grain and oilseed futures are mixed but generally quiet without fresh news.

Other Markets:

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

Corn:

Cupid drew back his bow overnight, and now the global investment community is in love with the idea of correcting Thursday's fearful losses. There has been widespread anxiety -- especially in the oil market and stock markets -- that global economic activity might slow significantly in 2016. Even though humans and livestock will continue to eat calories no matter what the oil price does, grain traders are still influenced by this sentiment, and indeed the corn market's speculators still hold a net-short position. At the start of Friday's trade, corn prices were extremely quiet within a penny of the previous close, and commodities in general showed a bias toward an upward bounce, correcting some of the week's losses. The DTN National Corn Index, an average of cash bids around the country, was $3.37 again Thursday, showing the national average basis level remained steady at 23 cents under the March futures contract.

Soybeans:

The soybean market's bullish ardor Thursday was more than enough to correct the week's losses, and there are still on-again, off-again higher prices being seen Friday morning. It was nearby soybean contracts that led that heroic charge Thursday, but the November contract benefitted as well, bringing the new crop soy-to-corn price ratio a little closer to normal: now 2.32-to-1. Compared to historic averages, this is still unfavorable to soybean planting from a revenue perspective, and will be closely watched during the month of February while the reference prices for crop insurance policies are being averaged. The DTN National Soybean Index was $8.26 Thursday afternoon, showing the U.S. average basis level remained steady at 48 cents under the March futures contract.

Wheat:

Through the last four trading sessions, the wheat chart has displayed a consistent pattern of ever-higher daily lows. This suggests the market is determined to bounce upward and stay within its longer-term sideways pattern. Domestic flour demand is especially important while a relatively strong U.S. dollar -- which is also bouncing higher Friday morning -- makes U.S. wheat export prospects challenging, so consider buying your valentine some cookies, doughnuts, bread, or pasta this Sunday. On Monday, the grain markets will not have a regular trading session due to the President's Day holiday. The DTN National Soft Red Wheat Index closed at $4.18 Thursday, demonstrating that the market for milling-quality low protein wheat continues to demand a supply-constrained premium over the HRW Index at $3.88. The DTN Spring Wheat Index was $4.61 Thursday, with a national average basis level steady at 25 cents under the March Minneapolis contract.

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

FollowElaine on Twitter: @elainekub

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