DTN Before The Bell Grain Comments

USDA Announces Sale Trifecta

Todd Hultman , DTN Grains Analyst
(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

December corn was down 1/2 cent, November soybeans were down 6 3/4 cents, and December Chicago wheat was up 1/4 cent. At 8 a.m. CDT, USDA announced 10.8 million bushels (275,000 mt) of U.S. corn were sold to Mexico for 2016-17. 6.9 million bushels (187,000 mt) of U.S. soybeans were sold to China and 5.1 million bushels (138,000 mt) of HRW wheat were sold to unknown destinations, both for 2016-17. Before the announcements, November soybeans were lower early Wednesday, testing their low at $9.43 on the final day of August.

Other Markets:

Dow Jones: Lower
U.S. Dollar Index: Higher
Gold: Lower
Crude Oil: Lower

Corn:

At 8 a.m. CDT, USDA announced 10.8 million bushels (275,000 mt) of U.S. corn were sold to Mexico for 2016-17. Before the announcement, December corn was slightly lower with scattered showers across the southern Plains. Conditions are expected to be mostly dry the next few days across the Corn Belt with the next rain expected in the northwestern Plains this weekend. Overall crop conditions are among their best in twelve years and, with no threat in the forecast, a 15 billion bushel harvest still looks likely. With December corn below $3.20, most of the damage to prices has already been done, but rallies are likely to be difficult the rest of 2016. DTN's National Corn Index closed at $2.74 Tuesday, priced 42 cents below the December contract and at its lowest price in over seven years. In outside markets, the U.S. dollar index is up .15, just below its 200-day average at 96.32.

Soybeans:

At 8 a.m. CDT, USDA announced 6.9 million bushels (187,000 mt) of U.S. soybeans were sold to China for 2016-17. Before the announcement, November soybeans were lower, challenging the August low of $9.43 with both, meal and oil also trading lower. As with corn, this year's crop conditions for soybeans are among the best in over a decade and it seems likely that harvest will total at least 4 billion bushels. Fortunately for producers, demand is also expected to exceed 4 billion bushels, but is stretched out over the 2016-17 season while harvest starts next month and will be over before we know it. The anticipation of harvest is already putting November soybean prices under bearish pressure and that seasonal trend typically lasts until early October. Given this year's success in growing all three grains, a post-harvest rally may be difficult to come by, but continued active demand for soybeans should help. DTN's National Soybean Index closed at $9.18 Tuesday, priced 33 cents below the November contract and at its lowest prices in four months.

Wheat:

At 8 a.m. CDT, USDA announced 5.1 million bushels (138,000 mt) of HRW wheat were sold to unknown destinations for 2016-17. Before the announcement, December Chicago wheat was slightly higher after a quiet overnight session that kept prices well below $4.00. DTN's five-day forecast expects moderate showers up and down the western Plains which should be no problem for spring wheat harvest and beneficial to next month's planting conditions in the southwestern Plains. With other wheat harvests doing well in Canada, Ukraine, and Russia, the world wheat ending stocks-to-use ratio is estimated near 35% in 2016-17, among its highest ever and that is keeping wheat prices depressed. December Chicago wheat remains under bearish pressure, still waiting for a bullish argument to rescue spot prices from their lowest level in ten years. DTN's National SRW index closed at $3.32 Tuesday, priced 60 cents below the December contract and at its lowest cash price in nearly seven years.

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

FollowTodd on Twitter @ToddHultman1

(KA)

Todd Hultman