DTN Closing Grain Comments

Corn Finishes Higher With Help From USDA

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

General Comments:

Corn was up 7 1/4 cents in the July contract and up 6 1/2 cents in the December. Soybeans were down 3 3/4 cents in the July contract and down 3/4 cent in the November. Wheat closed up 2 1/4 cents in the July Chicago contract, up 1/2 cent in the July Kansas City and up 4 cents in the July Minneapolis contract.

The June U.S. dollar index is up 0.06 at 99.60. June gold is up $1.90 at $1,218.00 while July silver is up 12 cents and July copper is down $0.0040. The Dow Jones Industrial Average is down 72 at 20,904. June crude oil is up $1.64 at $47.52. June heating oil is up $0.0377 while June RBOB gasoline is up $0.0069 and June natural gas is up $0.069.

Corn:

July corn closed up 7 1/4 cents after USDA estimated world ending corn stocks at a less-than-expected 195.3 million metric tons for 2017-18, based on a 3% cut in world production as China is expected to join the U.S. in producing less corn. Here in the U.S., USDA expects ending corn stocks to fall, from 2.295 billion bushels in 2016-17 to 2.11 bb in 2017-18, right in the bullseye of pre-report guesses. Wednesday's international numbers for corn showed modest increases in the current crop estimates for Brazil and Argentina, to 96.0 mmt and 40.0 mmt respectively, but production increases were offset by an equivalent increase in corn's demand estimate for 2016-17, largely due to increased consumption in Asia, the Middle East and North Africa. USDA's new estimates give traders a reason to be a little less bearish on corn in 2017 and the crop still needs to be planted. July corn remains in a sideways range, holding above support at $3.61 3/4. DTN's National Corn Index closed at $3.27 Tuesday, priced 39 cents below the July contract and still in a sideways range. There were 579 contracts of May corn delivered early Wednesday. In outside markets, the June U.S. dollar index is up 0.06 while June crude oil is up $1.64 after the Energy Department reported a 5.2 million barrel drop in last week's supplies.

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Soybeans:

July soybeans closed down 3 3/4 cents Wednesday, abandoning the immediate bullish reaction prices showed shortly after USDA's 11 a.m. CDT report was released. The initial bullish reaction was motivated by USDA's U.S. ending stocks estimate of 480 million bushels for 2017-18, which was much less than the pre-report guess of 572 mb. The 2017 soybean crop was estimated at 4.255 bb, as expected, but USDA also expects the U.S. to benefit from a 3.9% increase in world soybean demand. USDA's estimate of old-crop U.S. ending stocks slipped 10 mb to 435 mb, thanks to a 25 mb boost in the export estimate. For the world, USDA said it expects ending soybean stocks to drop from 90.14 mmt in 2016-17 to 88.81 mmt in 2017-18, a fairly neutral outlook for the new season. Slight increases were made to this season's crop estimates for Brazil and Argentina, to 111.6 mmt and 57.0 mmt respectively. Technically, the five-week trend for July soybeans remains down but would turn higher with a close above $9.83. DTN's National Soybean Index closed at $9.03 Tuesday, priced 71 cents below the July contract and down from its highest price in nearly five weeks. Among May contracts, there were 75 deliveries of soybean meal and 94 deliveries in soybean oil early Wednesday.

Wheat:

July Chicago wheat closed up 2 1/4 cents Wednesday, thanks largely to corn as wheat's USDA estimates leaned bearish overall. USDA expects U.S. ending wheat stocks to drop from 1.159 bb in 2016-17 to a lower-than-expected 914 mb in 2017-18, based on a 2017 wheat crop estimate of 1.82 bb. As most know by now, the winter wheat crop in western Kansas is at risk after a late-April snow. USDA's HRW wheat estimate was pegged at 737 mb for 2017-18, less than was expected, but it is still too early to have a good estimate. The more bearish numbers were waiting in Wednesday's world estimates where new-crop ending stocks came in at 258.29 mmt, much more than the 244.40 mmt expected. USDA expects world wheat production to be down 2.0% in 2017-18 but also expects a .7% reduction in demand, which is where the bulk of Wednesday's bearishness can be traced. Overall, not much has changed for wheat. July Chicago prices are still trying to find support for their new uptrend as we wait to learn more about this year's crops. DTN's National SRW index closed at $3.88 Tuesday, priced 41 cents below the July contract and down from its highest price in seven weeks. DTN's National HRW index closed at $3.584, down from its highest price in ten months. Among May contracts, there were 13 deliveries of Chicago wheat and one delivery of Kansas City wheat early Tuesday.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman