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Grains Look to Start Thursday Higher

After a day of marginal recovery following Tuesday's bearish USDA WASDE report, there's more room for higher prices heading into Thursday's trade, with corn, soybeans, and wheat all trading higher late in the overnight session.

In late overnight trading, the July old-crop corn contract is trading 3 1/4 cents higher at $3.65 1/2 per bushel, while the December new-crop contract is 3 cents higher at $3.81 1/2, according to Barchart.com. The July soybean contract is 3 3/4 cents higher at $9.61, while the November new-crop contract is 3 1/2 higher at $9.38. July wheat is 7 1/4 higher at $4.88 3/4 per bushel and the December contract is 6 1/2 cents higher at $5.11.

While some of the higher overnight prices can still be attributed to price recovery following Tuesday's bearish WASDE report, there's word of new demand and one primary bullish outside factor playing into this morning's early higher prices: Wednesday's weekly Energy Information Administration (EIA) ethanol report showed supplies dropped by .5 million barrels, while overall production moved almost 3% higher for the previous week. Weekly export sales data, which will shed light on more demand factors for the U.S. grains, will be released later Thursday morning.

In the outside markets, there's one major factor driving the bus for the grain bulls heading into Thursday's trade: The U.S. dollar index.

"From the low back during the week of December 15, the U.S. dollar rallied 12.77 points to a high of 100.39. From this rally the market has been in a downtrend, and so far this week, we have broken through the 50% retracement of 94.00," says Kluis Commodities market analyst Cory Bratland. "If we close below this level, our next area of support is 92.50, which is 62% retracement and then ultimately the low we had back in the week of December 15 at 87.63. If the U.S. dollar would happen to break lower to 87.63, this would be very positive to U.S. grains."

Meanwhile, rain falling in the western Corn Belt is expected to spread through the bulk of the region heading into Friday and the weekend, likely delaying any planting progress. Now, some farmers say they'll be planting soybeans well into June, a factor that could be bullish moving forward as the market's focus remains sharpened on crop weather.

"Rain on the way. Looks like we may be putting beans in the ground in June this year. Got some corn that needs replanted, but that may not happen either," says one Marketing Talk adviser in Iowa. Adds another in Ohio: "Tomorrow, I plan on finishing soybean planting. We have missed the heavy rains in my neck of the woods. Many are finished with their planting around here."

 

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