DTN Closing Grain Comments

Soybeans Sag Lower After Neutral Report

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

General Comments:

May corn closed down 1 cent per bushel and December corn was down 1/2 cent. May soybeans closed down 6 3/4 cents and November soybeans were down 6 cents. May K.C. wheat closed up 3 1/4 cents, May Chicago wheat was up 1 1/4 cents and May Minneapolis wheat was down 3 3/4 cents. The March U.S. dollar index is trading down 0.348 at 97.280. The Dow Jones Industrial Average is down 137.34 points at 25,335.89. April gold is up $13.40 at $1,299.50, May silver is up $0.31 at $15.35 and May copper is down $0.0105 at $2.9000. April crude oil is down $0.73 at $55.93, April heating oil is down $0.0184, April RBOB is down $0.0117 and April natural gas is up $0.001.

For the week:

May corn closed down 8 3/4 cents and December 2019 corn was down 5 3/4 cents. May soybeans were down 15 3/4 cents while November 2019 soybeans were down 15 1/4 cents. May Kansas City wheat was down 14 cents, May Chicago wheat was down 17 3/4 cents, and May Minneapolis wheat was down 9 cents.

Corn:

May corn ended down a penny at $3.64 1/4 Friday and finished the week down 8 3/4 cents, pressured by the anticipation of increased corn harvests in South America. USDA surprised many with a 100 million bushel (mb) increase in its estimate of U.S. ending stocks, from 1.735 billion bushels (bb) to 1.835 bb; 75 mb of the increase came from a lower export estimate and 25 mb came from a reduction in the estimate of ethanol demand. USDA's world estimates held a small bullish surprise as ending stocks were reduced from 309.78 mmt to 308.53 mmt (12.15 bb) -- largely the result of a 3-mmt increase in the estimate of China's corn demand. Corn crop estimates for Brazil and Argentina were unchanged at 94.5 mmt (3.72 bb) and 46.0 mmt (1.81 bb), respectively. This week, the trend in cash corn turned down, pressured by noncommercial selling in the futures market. DTN's National Corn Index closed at $3.34 Thursday, 31 cents below the May contract. In outside markets, the March U.S. dollar index is trading down 0.35 after the U.S. Labor Department said non-farm payrolls increased a mere 20,000 in February, much less than expected. The U.S. unemployment rate dropped from 4.0% to 3.8% in February.

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Soybeans:

There wasn't much in Friday's WASDE report to blame for lower soybean prices, but May soybeans did drop 6 3/4 cents to $8.95 3/4 Friday and were down 15 3/4 cents on the week. USDA lowered its estimate of U.S. ending soybean stocks from 910 mb to 900 mb for 2018-19, the result of a 10 mb increase in the crush estimate. There was a concern that the estimate of China's soybean demand would drop due to African swine flu, but USDA went easy, taking China's demand estimate down from 106.1 mmt to 105.1 mmt (3.86 bb). Argentina's soybean crop estimate stayed at 55.0 mmt (2.02 bb) and Brazil's crop was trimmed to 116.5 mmt (4.28 bb). USDA's estimate of world soybean stocks increased slightly, to 107.17 mmt (3.94 bb). Even though USDA kept its estimate of U.S. exports unchanged at 1.875 bb, soybean exports are still a concern. Earlier Friday, USDA said 24.4 million bushels (664,000 mt) of U.S. soybeans were sold to China for 2018-19. Friday's lower close put May soybeans at the lower end of its three-month range, but the trend is still sideways for both futures and cash prices. The biggest uncertainty for soybean prices continues to be the trade talks with China. DTN's National Soybean Index closed at $8.10 Thursday, staying in a sideways range and priced $0.92 below the May futures contract.

Wheat:

May K.C. wheat closed up 3 1/4 cents at $4.30 3/4 Friday, ignoring USDA's more bearish estimates after already being punished enough for one week. For the week, May K.C. wheat was down 14 cents and May Chicago wheat was down 17 3/4 cents. USDA increased its estimate of U.S. ending wheat stocks from 1.010 bb to 1.055 bb for 2018-19, after taking the export estimate down, from 1.000 bb to 965 mb. The resulting ending stocks-to-use ratio of 51% represents a fourth consecutive year of bearish influence on prices. USDA increased its estimate of world ending stocks, from 267.53 mmt to 270.53 mmt (9.94 bb), largely due a 5 mmt reduction in world demand, 3 mmt of which came from India. It continues to be disappointing that U.S. wheat exports did not get more business after a year of lower world production and May K.C. wheat prices are now back to their lowest levels in over a year. The trends are down for cash SRW and HRW wheat prices, while commercial support is helping the trend stay sideways for cash HRS wheat. DTN's National HRW index closed at $4.06 Thursday, its lowest price in over a year and down 21 cents from the May futures contract. DTN's National SRW index closed at $4.10 Thursday, also at its lowest price in over a year. .

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

Follow him on Twitter @ToddHultman

(CZ)

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Todd Hultman