DTN Closing Grain Comments

Grains Sag Lower as U.S. Dollar Pushes Higher

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

General Comments:

Corn was down 2 3/4 cents in the December contract and down 2 3/4 cents in the July. Soybeans were down 4 1/2 cents in the November contract and down 4 1/2 cents in the July. Wheat closed down 4 cents in the December Chicago contract, down 3 3/4 cents in the December Kansas City, and was down 1 3/4 cents in the December Minneapolis contract. The December U.S. dollar index is up 0.28 at 95.42. December gold is down $5.90 at $1,201.10 while December silver is down 3 cents and December copper is up $0.0265. The Dow Jones Industrial Average is up 139 points at 26,913. November crude oil is up $1.09 at $76.33. November heating oil is up $0.0290 while November RBOB gasoline is up $0.0093 and November natural gas is up 0.066.

Corn:

December corn ended down 2 3/4 cents at $3.64 3/4 Wednesday, a quiet day of trading that showed little movement. Except for scattered showers from Montana to northern Minnesota, Wednesday's map was mostly dry, but the seven-day forecast is expecting broad coverage of heavy rain from Oklahoma through the central Midwest and into Ontario. Flooding around Iowa and Wisconsin looks likely, which means more problems for harvest. After a fairly consistent season of good growing weather for much of the Corn Belt, harvest is encountering challenges. On the demand side, corn exports are off to a quick start and USDA said early Wednesday 9.05 million bushels (230,000 mt) of U.S. corn were sold to Japan for 2018-19. The Department of Energy said last week's ethanol production slipped from 1.036 million to 1.015 million barrels a day and ethanol inventory increased from 22.6 million to 23.4 million barrels. In spite of higher gasoline prices, spot ethanol prices remain below $1.30 a gallon, near their lowest prices since 2005. For now, December corn prices are trading sideways, well above their September low of $3.42 1/2. DTN's National Corn Index closed at $3.24 Tuesday, up from its September low and priced 43 cents below the December contract. In outside markets, the December U.S. dollar index is 0.28 after ADP Research said private sector jobs increased by 230,000 in September, more than was expected. The yield on 10-year T-notes increased to 3.17%, the highest in seven years and is becoming a bearish concern for grain prices.

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Soybeans:

November soybeans ended down 4 1/2 cents at $8.61 1/2, also a quiet day of trading with the market a bit puzzled as to how harvest will do with so much rain in the forecast over the next two weeks. Meanwhile, soybean planting in Brazil reportedly is going well with beneficial rains in this week's forecast. This is typically the time of year when China increases its buying of U.S. soybeans, but given this year's trade war, Chinese officials remain firm in their opposition to U.S. purchases (see Wednesday's article from DTN Ag Policy Editor Chris Clayton, "Diversification, Infrastructure Needed..."). Thursday morning's report of weekly export sales will offer the next clue and so far, soybean exports are dragging, down 18% from a year ago. Strained trade relations with China remain a bearish concern for U.S. soybean prices, but aside from the political risk, the trend has turned sideways and the September low of $8.12 1/4 is holding as support. DTN's National Soybean Index closed at $7.61 Tuesday, up from its lowest price in 11 years and priced $1.05 below the November contract, the weakest basis in at least 11 years. Among October contracts, delivery intentions totaled 210 for soybean meal and 779 for soybean oil early Wednesday.

Wheat:

December K.C. wheat ended down 3 3/4 cents Wednesday, at $5.18 3/4. Trade volume was light and prices mostly lower, while the U.S. dollar traded higher on the day. Winter wheat planting likely made progress Wednesday and is probably close to half-complete. Eastern Kansas may get some rain the next few days, but more is expected in the southwestern Plains this weekend into early next week. Planting will likely slow, but overall, the rain should be beneficial to the new crop. Temperatures in the western Canadian Prairies remain cold, but a drier forecast should help spring-wheat harvest progress in the week ahead. For now, December contracts for all three wheats are holding in a sideways range, supported by their lows in July. DTN's National SRW Index closed at $4.80 Tuesday, 39 cents below the December contract and up from its lowest price in two months. DTN's National HRW Index closed at $4.84 Tuesday, also up from its lowest price in two months.

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

Follow him on Twitter @ToddHultman1

(CZ)

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Todd Hultman