DTN Closing Grain Comments

Row-Crop Demand Strong in Q4

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

General Comments:

Corn closed up 7 1/2 cents in the December and up 7 1/4 cents in the July. Soybeans closed up 3 3/4 cents in the November and up 2 1/2 cents in the July. Wheat closed up 3 cents in the December Chicago, down 1 3/4 cents in the December Kansas City, and up 4 3/4 cents in the December Minneapolis. The December U.S. dollar index is down 0.04 at 95.43. December gold is down $8.40 at $1,317.60 while December silver is up $0.04 and December copper is up $0.0230. The Dow Jones Industrial Average is up 190 at 18,334. November crude oil is up $0.30 at $48.13. November heating oil is up $0.0155, November RBOB gasoline is up $0.0166, and November natural gas is down $0.056.

For the week:

December corn closed up 1/4 cent while July closed up 3/4 cent. November soybeans were down 1 cent while the July was up 1/4 cent. December Chicago wheat was down 2 3/4 cents, December Kansas City wheat was down 6 cents, and December Minneapolis wheat was up 10 3/4 cents.

Corn:

December corn closed 7 1/2 cents higher after USDA said there were 1.738 billion bushels of corn on hand as of Sep. 1, 627 million bushels of which are still on the farm. That was slightly below expectations and slightly more than the 2014-15 season ended with a year ago. Fourth quarter corn use totaled 2.984 billion bushels, which is the most in over a decade and possibly the most on record. Increased livestock numbers, increased ethanol margins, and a lack of competing supplies in Brazil all contributed to the final quarter's higher demand and those factors are still present. The bearish concern, of course, is this fall's record harvest keeping a lid on prices. However, harvest concerns won't last forever and prices should give demand more respect later this year. DTN's National Corn Index closed at $2.88 Thursday, priced 41 cents below the December contract and up from its lowest price in seven years. In outside markets, cattle and hog contracts were limit down ahead of USDA's Hogs and Pigs Report at 2 p.m. CDT.

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Soybeans:

November soybeans closed 3 3/4 cents higher Friday, helped by bullish export news and commercial buying in soybean oil. Early Friday, USDA said 7.3 million bushels (198,000 mt) of U.S. soybeans were sold to unknown destinations and another 4.3 million bushels (118,000 mt) were sold to China, both for 2016-17. This was the eighth soybean sale announcement in nine trading days and another bullish reminder of soybean's strong demand. Also confirming the case for soybean demand, USDA said Friday that Sep. 1 stocks of U.S. soybeans totaled 197 million bushels, an imperceptible increase from the previous season. To get there, soybean use totaled 673 million bushels in the final three months of 2015-16, a record amount that was helped by Brazil's lack of supplies and points to at least one more good quarter of demand. However, before November soybean prices can benefit from demand, they first need to get past harvest and so far, reports of big yields are keeping traders concerned about the size of the 2016 crop. DTN's National Soybean Index closed at $8.88 Thursday, priced 62 cents below the November contract and near its lowest price in five months. Early Friday, there were 150 deliveries of October soybean meal and 22 deliveries of October soybean oil.

Wheat:

December Chicago wheat traded lower much of the day, but closed a few cents higher, thanks to help from corn's higher price. USDA said Sep. 1 wheat stocks totaled 2.527 billion bushels, which was more than expected even as 890 million bushels of wheat use in the first quarter was the most in three years. USDA also estimated the 2016 U.S. wheat crop at 2.31 billion bushels, 1.672 billion bushels of which was listed as winter wheat. December K.C. wheat closed down 1 3/4 cents after USDA estimated HRW production at a more-than-expected 1.082 billion bushels. December Minneapolis wheat closed up 4 3/4 cents after USDA estimated other spring wheat production at a less-than-expected 534 million bushels. Out in the real world, winter wheat planting is going well in the southwestern Plains, but is running into rain interruptions in the eastern Midwest. Overall, there are no significant threats to wheat crops at this time and that is keeping noncommercials comfortable with their heavy short commitments. DTN's National SRW Wheat Index contract closed at $3.47 Thursday, priced 52 cents below the December contract and still near its lowest price in seven years. DTN's National HRW Index closed at $3.06, up from its lowest price in over ten years.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman