DTN Closing Grain Comments

Soybeans Hold Firm on Quiet Day of Trade

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN illustration by Nick Scalise)

General Comments:

Corn was down 3/4 cents in the December contract and down 1 cent in the July. Soybeans were up 4 1/4 cents in the November contract and up 3 1/4 cents in the July. Wheat closed down 3 1/4 cents in the December Chicago contract, down 1 cent in the December Kansas City, and down 3 1/2 cents in the December Minneapolis contract. The December U.S. dollar index is up 0.13 at 93.84. December gold is down $5.60 at $1,199.50 while December silver is down 8 cents and December copper is up $0.0055. The Dow Jones Industrial Average is up 83 points at 26,575. November crude oil is down $0.68 at $71.60. November heating oil is down $0.0064 while November RBOB gasoline is down $0.0092 and November natural gas is down 0.076.

Corn:

December corn ended down 3/4 cent at $3.63 Wednesday, after a day of quiet, low-volume trading. Rain fell across the Southern Plains Wednesday, but the Midwest was mostly dry and is supposed to stay that way the next few days. More concerning however, are the off and on rain chances over the next two weeks, hampering harvest efforts in the north-central Corn Belt. Along with strong export demand early in 2018-19, demand for ethanol production has stayed consistently high, even though ethanol prices are near their lowest levels since trading began in 2005. The U.S. Energy Department said last week's ethanol production totaled 1.036 million barrels per day last week, down from 1.051 million the previous week, while ethanol inventory slipped from 22.7 million to 22.6 million barrels. Cash corn has seen a decent 20-cent bounce from last week's low and may still encounter bearish pressure from this year's big harvest, but demand should continue to help prices move higher in early 2019. DTN's National Corn Index closed at $3.20 Tuesday, up from its 2017 low and priced 44 cents below the December contract. In outside markets, the December U.S. dollar index is up 0.13 after the Federal Reserve increased the federal funds rate target by a quarter percent, as expected to 2% to 2 1/4%. The Fed also increased its GDP estimate for 2018 from 2.8% to 3.1% -- a stronger argument for higher interest rates ahead.

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Soybeans:

November soybeans closed up 4 1/4 cents at $8.50 Wednesday, also a quiet day of trading limited by light volume. As mentioned above, prospects for harvest across the Midwest look better the next few days, but for fields in the north-central Midwest that still need to dry out, harvest may be difficult as rain chances are frequent the next two weeks. Meanwhile, planting in Brazil is off to a better start now after beneficial rains showed up last week and more are in the seven-day forecast. On the demand side, USDA corrected an earlier announcement to report 24.7 million bushels (671,934 mt) of U.S. soybeans sold to Mexico for 2018-19. While trade with China remains a major bearish concern, USDA's Grain Stocks report for September 1 is apt to show record fourth quarter demand for U.S. soybeans on Friday. Aside from the political risk, prices appear to be making seasonal lows, supported by commercial net longs while November prices are near their lowest level in nine years. DTN's National Soybean Index closed at $7.43 Tuesday, up from its lowest price in 11 years and priced $1.03 below the November contract, the weakest basis in at least 11 years.

Wheat:

December K.C. wheat lost a penny, ending at $5.21 and not showing much activity the past week as we move past summer and toward a part of the year known for lower volatility. Wednesday's rain in the southwestern Plains may slow winter wheat planting a bit, but the moisture is mostly welcome ahead of winter. At this time, Australia's wheat crop remains dry, recent rains have helped winter wheat planting efforts in Europe and southern Russia, U.S. planting is on track, and Canada's spring wheat harvest is encountering early winter-like conditions. Even though world wheat production will be down 3% to 5% this year, U.S. exports are struggling and Friday's report of September 1 wheat stocks may reveal the lowest first quarter demand in seven years. For now, December contracts for all three wheats are holding in a sideways range. DTN's National SRW Index closed at $4.76 Tuesday, 45 cents below the December contract and up from its lowest price in two months. DTN's National HRW Index closed at $4.82 Tuesday, also up from its lowest price in two months.

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

Follow Todd Hultman on Twitter @ToddHultman1

(CZ)

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Todd Hultman