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DTN Closing Grain Comments    12/12 14:02

   A Bullish Surprise in Wheat 

   March KC wheat has been quietly sideways for almost two months, but rallied 
12 cents on Thursday's close with no obvious bullish explanation for the move. 
On a day when President Trump and several media sources are suggesting a 
limited trade agreement with China is near, January soybeans were up 4 3/4 
cents and March corn was up 6 1/2 cents.

By Todd Hultman
DTN Lead Analyst





General Comments: 

   March corn closed up 6 1/2 cents and July corn closed up 6 1/4 cents. 
January soybeans closed up 4 3/4 cents and July soybeans were up 3 3/4 cents. 
March KC wheat closed up 12 cents, March Chicago wheat was up 11 cents and 
March Minneapolis wheat was up 4 3/4 cents. The December U.S. dollar index is 
trading up .37 at 97.43. The Dow Jones Industrial Average is up 209.26 points 
at 28,120.56. February gold is down $2.50 at $1,472.50, March silver is up 
$0.12 at $16.97 and March copper is up $0.0165. January crude oil is up $0.51 
at $59.27, January heating oil is up $0.0252, January RBOB gasoline is up 
$0.0070 and January natural gas is up $0.089.         

   Corn: 

   March corn closed up 6 1/2 cents at $3.77 3/4 Thursday, helped by bullish 
export news and a tweet from President Donald Trump which said, "Getting VERY 
close to a BIG DEAL with China." As DTN comments have previously pointed out, a 
recent boost in Brazilian corn prices has put export pricing back in favor of 
the U.S. and we finally saw evidence of that transition happening Thursday. 
Earlier, USDA said 34.4 million bushels (mb) of corn were sold last week, a 
higher amount from the previous week thanks to the top buyers of Mexico and 
Japan. Corn shipments still lagged at 20.9 mb and total shipments are down 56% 
in 2019-20 from a year ago. USDA later announced 42.3 mb (1,074,420 mt) of U.S. 
corn were sold to Mexico and 4.4 mb (110,744 mt) were sold to unknown 
destinations, both for 2019-20; 20.7 mb (525,780 mt) of corn were sold to 
Mexico for 2020-21. Thursday's weather map shows snow in Wisconsin, but is 
mostly clear for the rest of the Corn Belt. The seven-day forecast is mostly 
dry for the Corn Belt with heavy precipitation expected in the southeastern 
U.S. and along the Atlantic coast. Monday's final Crop Progress report from 
USDA estimated roughly 1.1 billion bushels (bb) of unharvested corn, more than 
600 mb of which is in northern states. Technically, the trend for cash corn 
remains down, but keep in mind we are entering a less volatile time of year for 
trading. Early Thursday, there were still 807 contracts of December corn open 
with Friday set as the final day of trading. DTN's National Corn Index closed 
at $3.53 Thursday, near its lowest price in three months and 19 cents below the 
March contract. In outside markets, the December U.S. dollar index is up 0.37 
in spite of an unexpected jump in U.S. jobless claims to a two-year high of 
252,000, reported RTTNews.com. Outside commodities were mostly higher.      

   Soybeans: 

   With Thursday's tweet from President Trump suggesting a trade deal with 
China is close, Dow Jones Industrials are moderately higher and January 
soybeans closed up 4 3/4 cents at $8.98 1/4. The Wall Street Journal cited 
unnamed sources Thursday and claimed U.S. negotiators offered to roll back as 
much as $180 billion of existing tariffs and cancel plans for new tariffs on 
Sunday. We have heard false optimism before, but there does seem to be a chance 
for a limited deal by Sunday. Aside from the trade talks, the final laps of 
soybeans are being harvested around the country and it remains to be seen if 
the USDA estimate of 3.55 bb will be reached after difficult fall conditions. 
Unlike corn, USDA's Jan. 10 soybean crop estimate should be close to the final 
number. So far in 2019-20, the demand side for soybeans has been encouraging 
and that continued in Thursday's weekly export sales report. USDA said 38.6 mb 
of soybeans were sold last week, primarily to unknown destinations and China; 
53.0 mb of soybeans were shipped, adding to a shipment total that is 24% higher 
in 2019-20 than the previous year. Rising soybean oil prices have increased 
soybean crush incentives lately and January soybean oil closed up 0.79 cent 
Thursday at 32.23 cents, the highest close in nine months. Outside the U.S., 
the seven-day forecast is generally favorable for Brazil's new soybean crop, 
expecting broad rain coverage. Technically, the trend for DTN's National 
Soybean Index is down, but from a larger perspective, prices are in the middle 
of their one-year range. DTN's National Soybean Index closed at $8.37 Thursday, 
holding above its lowest price in two months and 57 cents below the January 
contract.                              

   Wheat:   

   March KC wheat jumped up 12 cents to $4.42 3/4 Thursday, back to challenging 
its four-month high in one quick swoop. It is difficult to point to any one 
factor to explain Thursday's bullish surprise in wheat. In general, KC wheat 
prices have been under pressure since June with managed futures funds net 
short. The September low of $3.97 1/2 in March KC wheat was among the lowest in 
13 years and has become a point of firm support with bearish funds now needing 
to cover their net-short positions. It is no secret SRW wheat supplies are 
lower in 2019-20 and it was HRS wheat that showed the most export sales among 
wheat in Thursday's report. USDA said 18.5 mb of wheat were sold for export 
last week with Japan and Philippines named as top customers; 14.3 mb of wheat 
shipments were below the weekly pace needed to reach USDA's new export estimate 
of 975 mb. Total shipments, however, are up 21% from last year. The overall 
fundamental situation remains bearish for wheat with plentiful supplies around 
the world, but there is room for prices to have modest rallies in winter, 
before the next crop gets more attention. Technically, the trends remain up for 
cash SRW and HRW wheats and sideways for HRS wheat. Open interest is 
dangerously low for the December contracts of all three wheats, which expire 
Friday. DTN's National HRW Index closed at $4.03 Thursday, near its highest 
price in four months and 27 cents below the March contract. DTN's National SRW 
Index closed at $5.12, down from a one-year high.   

   Todd Hultman can be reached at todd.hultman@dtn.com

   Follow him on Twitter @ToddHultman1


(CZ)

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