May contracts of corn, soybeans and all three U.S. wheats closed higher Friday, shaking loose from Thursday’s late round of selling with signs of strong, underlying demand. Once again, soybean oil was among the stronger performers, but it was May oats that showed the highest percentage gain among Friday’s grains, closing up 13 1/2 cents.
May KC wheat closed up 5 1/4 cents at $6.26 1/4 Friday, finding support at the lower end of its narrow trading range. For the past six weeks, May prices have traded between $6.08 1/4 and $6.64 as traders take a wait-and-see approach in the final weeks of the Northern Hemisphere’s winter. One of the things they’re waiting for is a general assessment of how crops emerge in the weeks ahead after enduring a mostly dry winter in the western U.S. Plains and bitter cold temperatures in February. Drought is also a looming threat, but there appears to be some help for moisture in the ten-day forecast. Kansas and Oklahoma received beneficial rain amounts overnight, which also stretched to Arkansas. Much of the central Plains and Midwest have increased chances for precipitation the next ten days with the heavier amounts favoring the eastern Midwest. The western Plains may catch some moisture, but amounts will be light. As reported by DTN Senior Analyst Dana Mantini in Before the Bell Grains, winter wheat conditions in Russia appear to have improved, but will also be watched closely in the weeks ahead. Russian wheat prices at the Black Sea aren’t offering any obvious clues yet, also trading roughly sideways the past six weeks and priced near $289 mt late Friday. From a technical view, the trends remain up for all three U.S. wheats as prices hold above recent support, but upward momentum has stalled. In May KC wheat, a close below the February low of $6.08 1/4, if it happened, would confirm a double-top. DTN’s National HRW Index closed at $5.95 Thursday, down from its highest price in six years. DTN’s National SRW Index closed at $6.29, also down from its highest price in six years. There have been no deliveries yet in March Chicago wheat and there were deliveries on 100 contracts of March KC wheat early Friday.
May corn closed up 13 cents at $5.45 1/2 Friday, trimming its weekly loss to 2 cents as prices continue to hold roughly sideways since February. Renewed concerns about African swine fever are offering the first bearish doubts to corn prices since the rally began in August and specifically threaten China’s need to buy more corn. So far however, market clues continue to look bullish. To date, there have been no deliveries in March corn. March corn’s premium over the May contract expanded to 16 1/2 cents Friday, a strong bullish sign of commercial demand, which also goes along with the bullish implications of corn’s unusually narrow basis. In addition, May corn on China’s Dalian exchange was up 1.1% Friday and remains expensive at the equivalent of $10.92 a bushel. Thursday’s export sales report showing another new marketing year low for corn sales last week was disappointing, but as we saw in January, quiet activity for a time doesn’t prevent China from showing up with more purchases later. January data from the U.S. Census Bureau showed 164.6 million gallons of ethanol exports, up 9% from a year ago; 916,541 metric tons (mt) of exports of distillers grains were up from December, but down 6% from a year ago. The seven-day forecast remains wet for central Brazil, but we assume more soybean harvest progress is being made. Only lighter rain amounts are in store for southern Brazil and Argentina where drier conditions remain a concern. Late Thursday, the Buenos Aires Grain Exchange said 16% of Argentina’s corn crops are now rated poor or very poor, up from 12% the previous week. Fundamentally, corn needs help to justify current prices above $5.00 and the bullish potential is largely found in China’s demand and the risk of adverse weather. Technically, the trend in May corn remains up as long as prices hold above the February low of $5.23 1/4. DTN’s National Corn Index closed at $5.20 Thursday evening, down from its seven-year high and 13 cents below the May contract. Outside commodities are mostly higher and the March U.S. Dollar Index is up 0.38. The U.S. Labor Department said nonfarm payrolls increased by 379,000 in February, much more than expected. The U.S. unemployment rate dropped from 6.3% in January to 6.2% in February.