DTN Closing Grain Comments

Investor Selling Weighs on Commodities

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
Connect with Cliff:
(DTN illustration by Nick Scalise)

General Comments:

Corn was down 2 cents in the December contract and down 1 1/2 cents in the July. Soybeans were down 6 3/4 cents in the November contract and down 5 cents in the July. Wheat closed down 9 3/4 cents in the December Chicago contract, down 5 cents in the December Kansas City, and down 3 cents in the December Minneapolis contract.

The September U.S. dollar index is 0.253 lower at 94.515 following weaker-than-expected inflation data released. December gold is $3.80/ounce lower at $1,207.10/ounce while December silver is 0.052 cent lower and December copper is 0.006 higher. The Dow Jones Industrial Average is up 123.3 points at 26,122. October crude oil is $1.61/barrel lower at $68.76/barrel as Hurricane Florence is downgraded and October natural gas is 0.017 lower.

Corn:

Grains continued to face pressure on Thursday following bearish news from USDA on Wednesday, although investors seemed sellers of most commodities on Thursday despite the weaker USD trade. December corn broke below its July low in late-session trade to reach a fresh contract low of $3.48 3/4 per bushel (bu), although bounced from this low to pare losses to 2 cents and finish at $3.50 1/2/bu. There were signs of supportive commercial buying Thursday, with the Dec/March spread narrowing by 1/4 cent to minus 12 1/4/bu. Despite the larger-than-expected crop, the current corn price remains well above the 2018 low of $3.38 3/4/bu, a level reached in the month of June on the July contract.

Weekly export sales for the first six days of the crop year were viewed as neutral for 2018/19 corn prices, with outstanding sales plus shipments up 44% from the same period last crop year at 597 million bushels, while weekly shipments were up 2% from the same week last year. Final weekly shipments for 2017/18 corn totaled 2.263 billion bushels, while a Census Bureau adjustment of 148 mb brings the final tally close to USDA's 2.40 bb estimate. Daily sales included 142,876 mt sold to Costa Rica for 2018/19.

DTN's Market Weather Factors were viewed as neutral for corn on Thursday, with favorable weather expected over the next four days, although disruptions are expected in the Western Corn Belt in the next week.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

DTN's National Average Corn Basis strengthened on Wednesday to 39 cents under the December, leaving the National Corn Index down 10 cents to $3.13/bu.

Soybeans:

Soybeans took back a portion of Wednesday's gains, with the November ending down 6 3/4 cents to $8.33 1/4 following Wednesday's 8 1/4-cent gain. Trade continues sideways overall with a range of 32 1/4 cents traded over the past 13 sessions as traders position themselves for a record-sized crop along with trade issues with the world's biggest buyer, which is China. Further challenges remain for world demand, with USDA lowering China's import projections for soybeans by 1 million metric tons this month to 94 mmt, while China's Ag Ministry announced the same day the goal to reduce imports by roughly 10% to 83.5 mmt. This would be the first year-over-year drop in import volumes seen since 2003/04.

Weekly export data in the U.S. was viewed as neutral for soybeans, with cumulative sales at the same level as reported this time last year at 625 mb, while weekly shipments were down 22% from the same week last year. Final shipments for soybeans for 2017/18 were tallied at 2.072 bb, with an additional 46 mb Census Bureau adjustment, with the total volume close to USDA's estimate of 2.110 bb. Daily sales reported included 108,010 metric tons sold to Mexico, 40,000 mt sold to an unknown destination and a further 80,000 mt sold for 2019/20.

DTN's National Average Soybean Basis remained steady at $1.00 under the November contract on Wednesday, leaving the National Soybean Index at $7.40/bu.

Wheat:

Wheat futures added to Wednesday's losses, with December spring wheat down 3 cents, December K.C. wheat down 5 cents and December Chicago wheat down 9 3/4 cents. Both K.C. and Chicago wheat reached nine-week lows Thursday, with the most active Chicago contract closing below $5 on the December chart for the first time since July 11, with signs of bearish commercial selling.

Weekly export sales continues to be viewed as bearish for wheat, with total shipments plus sales at 358 mb and down 24% from the same period last year while weekly shipments are down 31% from the same week last year.

Strategie Grains reduced its estimate for soft wheat production in the EU by 0.9 mmt to 126.8 mmt while leaving durum production unchanged at 8.2 mmt, for a total of 135 mmt as compares to the 137.5 mmt reported by USDA on Wednesday, unchanged from the previous month. European milling wheat closed lower for the third straight session on Thursday, while reaching a seven-week low.

DTN's National Average HRW Basis remained steady at 42 cents under the December future on Wednesday, with the DTN National Hard Red Winter Index ending down 16 cents at $4.65/bu. Wednesday's National Average Soft Red Winter Basis strengthened 2 cents to 45 cents under the December, leaving the National Soft Red Winter Index at $4.62/bu. The National Average Spring Wheat Basis was 1 cent stronger at 62 cents under the December on Wednesday, with the DTN National Hard Red Spring Index ending 10 cents lowered at $5.03/bu.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

Follow Cliff Jamieson on Twitter @CliffJamieson

(CZ)

P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]

Cliff Jamieson