DTN Closing Grain Comments

General Comments:

Corn was down 16 1/4 cents in the September contract and down 15 1/2 cents in the December. Soybeans were down 9 cents in the August contract and down 9 1/4 cents in the November. Wheat closed down 16 cents in the September Chicago contract, down 13 1/2 cents in the September Kansas City, and down 14 cents in the September Minneapolis contract. The September U.S. dollar index is up 0.01 at 95.43. August gold is up $5.50 at $1,220.20 while September silver is up 14 cents and September copper is up $0.0110. The Dow Jones Industrial Average is up 130 at 21,539. August crude oil is up $0.61 at $45.65. August heating oil is up $0.0023 while August RBOB gasoline is up $0.0052 and August natural gas is down $0.066.

Corn:

December corn closed down 15 1/2 cents Wednesday and USDA's new estimates will be blamed, but the larger culprit may be the weather. USDA increased its estimates of U.S. ending corn stocks for the current season and 2017-18. A 75-million bushel reduction in feed demand took old-crop ending stocks from 2.295 billion bushels to 2.370 billion. A 190-million bushel production increase in 2017-18 pushed new-crop ending stocks up from 2.110 billion bushels to 2.325 billion. Yield estimates were unchanged for both corn and soybeans and will be updated with help from field data on August 10. USDA also increased its estimate of world ending corn stocks for 2017-18 from 194.33 mmt to a more-than-expected 200.81 mmt, helped by a one million metric ton increase in Argentina's corn crop. The bigger hit to prices may have come from changing forecasts as expectations for hotter Midwest temperatures appear to be easing in the extended forecast. With 2017 crop conditions still at risk, December corn prices are volatile and the trend remains up. Four-hundred-forty July corn contracts were delivered early Wednesday with July U.S. grain futures contracts set to expire early Friday. DTN's National Corn Index closed at $3.56 Tuesday, priced 45 cents below the September contract and near its highest price in a year. In outside markets, the September U.S. dollar index is up 0.01, staying roughly steady while Federal Reserve Chairman Yellen spoke to Congress. The Federal Reserve's Beige Book described slight to moderate economic growth across all 12 Fed Districts.

Soybeans:

November soybeans closed down 9 1/4 cents Wednesday with changing weather outlooks overruling the impact of USDA's lower U.S. ending stocks estimates. USDA reduced its estimate of old-crop soybean stocks from 450 million bushels to 410 million, thanks to a 50-million-bushel increase in the export estimate. The bullish adjustment also flowed through to the new-crop season, resulting in a lower new-crop ending soybean stocks estimate of 460 million bushels or 10.9% of annual use. USDA kept most of its world estimates unchanged for 2017-18, but because of an adjustment from a prior year, the estimate of world ending soybean stocks was increased from 92.22 mmt to 93.53 mmt, a little more than expected. As mentioned with corn, the bigger issue for soybean prices these days is the changing weather patterns as we approach mid-July. Currently, the best rain chances remain confined to the eastern Midwest, but expectations for hot and dry weather in the extended forecast may be easing and that pressured Wednesday's grain prices lower. This continues to be a volatile time of year and so far, the trend in November soybeans remains up. Among July contracts, 160 soybeans, 68 soybean meal and 43 soybean oil were delivered early Wednesday. DTN's National Soybean Index closed at $9.63 Tuesday, priced 67 cents below the August contract and at its highest price in four months.

Wheat:

September Chicago wheat closed down 16 cents Wednesday, pressured by USDA's new estimates and a chance for above-normal precipitation in the northwestern Plains in the 8- to 14-day forecast. It was no surprise that USDA's ending stocks estimate for 2016-17 matched the June 30 Grain Stocks report total of 1.184 billion bushels, but USDA's ending stocks estimate of 938 million bushels for 2017-18 was more than expected. All wheat production of 1.76 billion bushels was a little more than expected, as were the 1.28 billion bushels of winter wheat and 423 million bushels of other spring wheat. A 25-million-bushel reduction in the new-crop export estimate also added to ending stocks and is a surprise, given the U.S. wheat exports higher-than-expected early pace. USDA's 2017-18 estimate of world ending wheat stocks was also more than expected, at 260.60 mmt and is nearly 3 mmt higher than the previous season. USDA made small reductions to production estimates for Australia, Europe, China, and Ukraine, which modestly outmatched a 3-mmt increase for Russia. Technically, all three wheats remain in uptrends, but Wednesday's sell-off likely damaged momentum indicators on winter wheat charts. Among July contracts, 38 Chicago and 113 K.C. wheat were delivered early Wednesday. DTN's National SRW index closed at $5.20 Tuesday, priced 33 cents below the September contract and near its highest price in two years. DTN's National HRW index closed at $4.89, near its highest price in two years.

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

Follow him on Twitter @ToddHultman1

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