DTN Closing Grain Comments

Soybeans Shake Off Bearish News, End Higher

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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General Comments:

Corn closed down 1/4 cent in the May contract and was unchanged in the December. Soybeans closed up 4 1/4 cents in the May and up 1/4 cent in the November. Wheat closed unchanged in the May Chicago, down 1 1/2 cents in the May Kansas City, and down 2 1/2 cents in the May Minneapolis. The March U.S. dollar index is up 0.15 at 89.80. April gold is down $1.90 at $1,330.80 while March silver is down $0.10 and March copper is down 0.0370. The Dow Jones Industrial Average is up 127 at 25,090. April crude oil is up $0.63 at $63.40. April heating oil is up $0.0150, April RBOB gasoline is up $0.0251, and April natural gas is down $0.021.

For the week:

May corn closed down 1/2 cent and December was up 1/4 cent. May soybeans were up 15 cents while the November was up 6 cents. May Chicago wheat was down 7 1/4 cents, May Kansas City wheat was down 8 3/4 cents, and May Minneapolis wheat was down 2 1/2 cents.

Corn:

May corn ended down a quarter-cent Friday and was down a half-cent on the week, refusing to budge away from prices near their highest levels in four months. South America's weather remains supportive for corn prices with the seven-day forecast for southern Brazil and Argentina staying mostly dry. On Thursday, the Buenos Aires Grain Exchange lowered its estimate of Argentina's corn crop from 39.0 million metric tons to 37.0 mmt (1.5 billion bushels). There has also been some concern that wet weather in central Brazil could delay planting of the second corn crop, but so far, Brazil's soybean harvest appears to be close to its usual pace. With DTN's National Corn Index up 42 cents from its August low, demand has been active, but not for exports. USDA said last week's export sales and shipments of corn totaled 61.2 million bushels and 33.5 mb respectively, another bearish combination for the week that has total exports down 29% in 2017-18 from a year ago. USDA later mentioned 4.5 mb (115,000 metric tons) of U.S. corn were sold to Egypt for 2017-18. At Friday's Ag Forum in Arlington, Virginia, USDA put out an early estimate of 2.27 bb of ending U.S. corn stocks in 2018-19, based on 14.39 billion bushels of production. If true, that is only down slightly from the current season's estimate of 2.35 bb, and would keep prices roughly where they already are. However, weather will have the final say and there is plenty of uncertainty ahead. For now, the trend remains up in May corn. DTN's National Corn Index closed at $3.37 Thursday, priced 30 cents below the March contract and near its highest price in seven months. In outside markets, the March U.S. dollar index is up 0.15 in a quiet day of trading while most commodities were mixed.

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Soybeans:

May soybeans had an active Friday, trading higher overnight, then dipping lower after traders saw bearish news in USDA's export sales report, only to finish the session up 4 1/4 cents at $10.47 1/2, posting a 15 1/4 cent gain on the week. Early Friday, USDA said last week saw a net reduction of 4.0 mb of export sales while shipments totaled 32.8 mb. It was obviously a bearish showing for the week after China showed reductions of 13.3 mb and total soybean shipments remained down 13% in 2017-18 from a year ago. A short time later, USDA said 3.9 mb (106,000 mt) of U.S. soybeans were sold to unknown, 1.5 mb of which were for 2017-18. On Thursday, the Buenos Aires Grain Exchange lowered its estimate of Argentina's soybean crop from 50.0 mmt to 47.0 mmt (1.7 bb). I know it's a tradition, but it seems a bit odd that USDA put out early soybean estimates for 2018-19 Friday because there is so much we still don't know about South America's performance this spring that will have a big say on how 2018-19 finishes. USDA is estimating 460 million bushels of U.S. ending stocks in 2018-19 and an average farm price of $9.25 per bushel. In spite of USDA's lower price estimate and with plenty of uncertainty ahead, the trend remains up for both, May soybeans and May soybean meal. DTN's National Soybean Index closed at $9.63 Thursday, near its highest price in seven months and priced 69 cents below the March contract.

Wheat:

May Chicago wheat ended unchanged Friday at $4.64 1/4, securing a loss of 7 1/4 cents on the week as prices found it difficult to maintain their highest altitude in four months. This week's news should have been supportive with flooding concerns in the southeastern Midwest and ongoing drought in the western Plains, but as last week's CFTC report showed, much of the short-covering rally has played out with traders holding positions that were close to neutral. Convincing traders to go long in winter wheat is a more difficult task with the world well supplied and U.S. exports dragging. Early Friday, USDA said last week's export sales and shipments of wheat totaled 12.1 mb and 15.4 mb respectively, still bearish amounts that are not creating much movement of U.S. wheat supplies. USDA's early estimate of U.S. ending wheat stocks in 2018-19 was pegged at 931 mb Friday morning, down a little from this year's 1.009 bb and expecting an average farm price of $4.70. For now, the trends in winter wheat contracts remain up. DTN's National SRW index closed at $4.24 Thursday, priced 28 cents below the March contract and down from its highest price in six months. DTN's National HRW index closed at $4.29, down from its highest price in six months.

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

Follow Todd Hultman on Twitter @ToddHultman1

(CZ)

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Todd Hultman