DTN Closing Grain Comments

Soybean Losses Exceed Wheat Gains

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

General Comments:

Corn closed down 4 1/2 cents in the March contract and down 4 cents in the July. Soybeans were down 22 cents in the January contract and down 21 1/2 cents in the July. Wheat closed up 7 1/4 cents in the March Chicago contract, up 4 3/4 cents in the March Kansas City, and up 1 1/2 cents in the March Minneapolis contract.

The December U.S. dollar index is up 0.93 at 101.19. February gold is down $5.30 at $1,172.20 while March silver is down $0.20 and March copper is down $0.0185. The Dow Jones Industrial Average is up 85 at 19,635. January crude oil is up $1.09 at $50.86. January heating oil is up $0.0081 while January RBOB gasoline is down $0.0012 and January natural gas is up $0.094.

Corn:

March corn closed down 4 1/2 cents Thursday, influenced by the sell-off in soybeans and also showing caution among traders ahead of Friday's WASDE report. Dow Jones' pre-report survey expects USDA to increase its ending stocks of U.S. corn from 2.403 billion bushels to 2.416 bb, but with no change in the production estimate expected, a reduction in stocks seems more likely as exports have been running well above USDA's estimated pace. USDA said last week's export sales and shipments of corn totaled 58.9 million bushels and 53.8 mb respectively, a bullish combination that has total exports up 83% in 2016-17 from a year ago. USDA also reported 13.1 mb (332,000 metric tons) of optional-origin corn were sold to South Korea for 2016-17. The bearish concern for corn is the possibility of a record corn crop in Brazil. So far, growing conditions have been favorable, but it may be too early for USDA to increase its estimate, knowing that the second corn crop is still several months away. March corn continues to trade in a sideways range, between $3.42 and $3.69 with a fundamentally bearish outlook. DTN's National Corn Index closed at $3.16 Wednesday, priced 42 cents below the March contract and near its highest prices in three months. 5,135 contracts of December corn were open early Thursday and there have still been no deliveries, a potentially bullish situation. In outside markets, the U.S. dollar index is up 0.93 after the European Central Bank said it will start reducing its pace of monthly bond purchases in April.

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Soybeans:

January soybeans fell 22 cents Thursday in what looked like a rout of profit-taking ahead of Friday's WASDE report and also came after making a new four-month high just last week. Whatever sparked the selling, it shouldn't be blamed on exports. USDA said early Thursday that last week's export sales and shipments of soybeans totaled 53.7 and 68.7 million bushels respectively, bullish enough to keep total exports up 24% from a year and well above USDA's estimate for a 6% increase in 2016-17. USDA also said 5.0 million bushels (136,000 mt) of U.S. soybeans were sold to unknown and 20,000 mt of soybean oil were sold to South Korea, both for 2016-17. It was the fourth consecutive day a soybean sale was announced. Bearish concerns for soybeans include Brazil's next crop, which is doing well so far and a possible trade conflict with China in 2017. For now, January soybeans have corrected back from resistance at $10.68, but remain in an uptrend. DTN's National Soybean Index closed at $9.78 Wednesday, priced 72 cents below the January contract and near its highest price in four months. There were 292 deliveries of December soybean oil and 3 deliveries of December meal delivered early Thursday.

Wheat:

March Chicago wheat closed up 7 1/4 cents Thursday, helped by a mix of commercial buying and noncommercial short-covering as winter weather reached the southwestern Plains. Central Texas saw some snow Thursday morning, but for the most part, wheat crops were unprotected as temperatures reached single-digits in western Kansas and were below freezing in Texas. Early Thursday, USDA said last week's export sales and shipments of wheat totaled 18.5 mb and 20.4 mb, a bullish combination for the week that put total exports up 29% from a year ago. Unfortunately for wheat producers, the export pace is not enough to put a dent in supplies as Friday's WASDE report will remind us again. March Chicago wheat continues to trade near its 10-year lows with no bullish arguments in view. DTN's National SRW index closed at $3.50 Wednesday, priced 51 cents below the March contract and still near its lowest cash prices in seven years. DTN's National HRW index closed at $2.93, near its lowest prices in 11 years. In December wheat contracts, there were 35 deliveries of Chicago and 33 deliveries of K.C. early Thursday. December grain futures are set to expire by Dec. 14 and not many wheat contracts are still trading.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman