7:45 a.m. CST prices at CME Globex: March corn is down 2 1/4, March soybeans are up 5 3/4 cents. March KC wheat is down 1, March Chicago wheat is down 1/4, and March MIAX Minneapolis wheat is down 1 cent
WHEAT:
Wheat markets are mostly mixed to lower early Friday with both Kansas City and Chicago relinquishing overnight gains. Paris milling wheat futures are lower as well. Despite rising and much higher world wheat supplies, U.S. wheat sales continue to outpace expectations with commitments at 802 mb compared to just 682 mb last year at this time. U.S. wheat is currently overpriced relative to the competition, with Argentine wheat even cheaper than U.S. FOB corn. Supportive is the fact that the Central and Southern Plains feature many dry and drought-stricken areas. The wheat area in some form of drought rose to 43% in the past week from just 23% a year ago. Funds bought in some of their short position on Thursday and are still thought to be short just over 80,000 contracts in Chicago. The next strong resistance on wheat is about a dime higher from here. DTN’s National HRW Index closed at $4.71 and 67 under the March futures board.
Corn
March corn futures are threatening to end the three-day winning streak and are slightly lower early Friday. Corn has been the beneficiary of the sharp soybean rally which saw spot March beans rise over 50 cents in the past few days on optimism that China would buy more old-crop U.S. beans. Rain is falling and projected to fall again in arid Argentina with the two-week totals in dry areas like Cordoba, Santa Fe and northern Argentina likely to bring totals of from 2 to 4 inches. Argentine corn conditions slipped modestly to 44% good to excellent. Although that is the fifth consecutive weekly slide in crop ratings, it seems to have stabilized and the good-to-excellent category is still 13 percentage points higher than a year ago. Analysts, assuming weather forecasts are accurate, still look for the Argentine crop to be record large at 58 million metric tons (mmt) to 60 mmt. Meanwhile, Argentine FOB premiums are falling, sending Argentine corn offers to a nearly 40-cent discount to those from the U.S. Gulf. U.S. demand is slipping, though still above USDA estimates, with last week’s export sales of 41 mb falling to a four-week low. Still U.S. corn export commitments of 2.312 billion bushels (bb) are far above last year’s 1.762 bb at the same time. Traders are looking for exports to be cut, possibly in next Tuesday’s February WASDE report, sending ending stocks higher. With the recent euphoria stemming from a social media post suggesting China could buy an additional 8 mmt (294 mb) of U.S. beans, corn was a beneficiary as funds chose to cover shorts Thursday. Coming into Friday, funds are thought to still be short roughly 40,000 contracts. Just above in the $4.35 to $4.45 range, March corn should face plenty of sell orders. DTN’s National Corn Index closed at $4.03 with a corn basis of 32 under the March futures contract.
