DTN Early Word Grains 02/09 07:20
Grains Higher at 7:15 a.m. CST
Opening calls subject to release of USDA reports at 7:30 a.m. CST.
By Darin Newsom
DTN Senior Analyst
7:15 AM e-CBOT: Corn 3 higher, Soybeans 9 higher, Wheat 2 higher.
GENERAL OPENING CALL Opening calls subject to release of USDA reports at 7:30
a.m. CST
6:00 AM e-CBOT Corn 3 1/4 higher, Soybeans 6 3/4 higher, Wheat 1 3/4 higher.
Grain futures continued to move higher in front of February's USDA numbers
during the overnight session. Indications are that these reports could be
slightly bullish, but largely ignored.
OUTSIDE MARKETS The Dow Jones Industrial Average closed 103.84 points lower
Monday at 9,908.39. The overnight session saw the Dow Jones futures trade 31
points higher, indicating the market could see renewed buying interest Tuesday.
Asian markets were mostly higher with the Nikkei down 18.92 points. European
markets were mostly higher. The overnight crude oil market was $.17 higher at
$72.06 while Brent crude was $.27 higher at $70.38. The April gold contract was
$1.00 higher at $1,067.70 while the U.S. dollar index is 0.082 lower at 80.220.
Soybeans at the Chinese Dalian Commodity Exchange were higher while the
Malaysian palm oil market was also higher.
BULL BEAR
1) U.S. ending stocks of corn are 1) World ending stocks of corn are
expected to decrease 16 mb. expected to rise slightly.
2) U.S. ending stocks of soybeans are 2) World ending stocks of soybeans are
expected to slip to 219 mb, down expected to approach 60 mmt, if not
26 mb from the January estimate. surpass this number in Tuesday's
report.
3) U.S. ending stocks of wheat are 3) World wheat ending stocks are expected
expected to be trimmed by 3 mb to climb closer to 200 mmt, the
from the January estimate to 973 largest since the 2001-2002 marketing
mb. year.
See Grain Archives for more information on the fundamental situation in
grains. See the DTN Ag Weather Brief for complete market weather comments.
MORE COMMODITY-SPECIFIC COMMENTS
CORN Heading into Tuesday's Supply and Demand reports, estimates indicate a
slightly bullish short-term reaction due to an expected decrease of 16 mb in
U.S. ending stocks. By process of elimination, this decrease could come from an
increase in ethanol demand offset by a possible decrease in export demand. Feed
demand could be left alone given the 150 mb increase seen in the January
report. As for exports, Monday's weekly inspection number came in well below
what was needed this week, keeping demand 8 percent behind the expected pace.
If this continues, export demand projections could be trimmed in subsequent
reports to near 1.89 bb from the current 2.05 bb.
SOYBEANS Soybeans continue to follow short-term technical influences,
rallying to almost $9.40 both Monday and again in the overnight session after
posting a low of $9.00 last week. Much of this rally has been due to
noncommercial short-covering as the strengthening carry in the futures spreads
indicates a more bearish supply and demand situation. This sentiment could be
confirmed in the world ending stocks numbers in Tuesday's Supply and Demand
report. Pre-report estimates show that world ending stocks could climb to just
under 60 mmt. However, if larger than expected increases are seen in Brazilian
and Argentine production (January numbers were 65 mmt and 53 mmt respectively)
then world ending stocks could climb above 60 mmt and approach the 2006 number
of 62.9 mmt (the largest on record).
WHEAT The wheat market could be dominated once again by a bearish world
ending stocks number once Tuesday's Supply and Demand report is released with
pre-report estimates expecting this number to creep closer to 200 mmt
(January's projection was 195.6 mmt). Yes, U.S. ending stocks are expected to
be trimmed by 3 mb despite the continued slow pace of export demand. Tuesday's
export inspection number came in above what was needed this week to get the
market back on pace with USDA's demand projection of 825 mb, but overall the
market continues to run 5 percent behind expected pace. If this continues
through the last 16 weeks of the marketing year wheat could see this demand
projection trimmed to 785 mb.
DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.21 $0.05 -$0.35 (Mar) $0.00
Soybeans: $8.84 $0.16 -$0.45 (Mar) $0.01
SRW Wheat: $3.97 $0.13 -$0.87 (Mar) $0.02
HRW Wheat: $4.06 $0.10 -$0.89 (Mar) -$0.01
HRS Wheat: $5.16 $0.10 $0.04 (Mar) $0.00
Darin Newsom can be reached at darin.newsom@dtn.com
Darin can be followed throughout the day at
http://www.twitter.com/DarinNewsom
(CZ)
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