DTN Closing Grain Comments

General Comments:

Corn was down 15 cents in the September contract and down 15 1/4 cents in the December. Soybeans were down 32 cents in the September contract and down 33 cents in the November. Wheat closed down 19 cents in the September Chicago contract, down 15 1/2 cents in the September Kansas City and down 30 3/4 cents in the September Minneapolis contract.

The September U.S. dollar index is down 0.04 at 93.38. December gold is up $11.60 at $1,290.90 while September silver is up 21 cents and September copper is down $0.0235. The Dow Jones Industrial Average is down 148 at 21,900. September crude oil is down $0.74 at $48.82. September heating oil is down $0.0133 while September RBOB gasoline is down $0.0135 and September natural gas is up $0.105.

Corn:

December corn closed down 15 1/4 cents Thursday, hit by a higher-than-expected yield estimate of 169.5 bushels an acre from USDA. Not only was the estimate higher than expected, but it was also above pre-report estimates and does not match this year's harsher crop conditions. USDA's production estimate of 14.15 billion bushels results in U.S. ending stocks of 2.273 bb for 2017-18, down from a month ago but more than was expected. USDA's estimate of world ending corn stocks was close to last month at 200.87 milliion metric tons but also higher than expected with a 1.5 mmt boost in the estimate of Brazil's current corn production. On the demand side, USDA kept its export estimate unchanged for 2016-17. Earlier Thursday, USDA said last week's export sales and shipments of corn totaled 2.0 million bushels and 38.3 mb respectively, a neutral combination for the week that continues to see business leaning toward South America. Now that USDA has presented a suspicious yield estimate, December corn has cracked below 10-month support and is at risk of trading lower with noncommercials last seen net long. DTN's National Corn Index closed at $3.32 Wednesday, priced 40 cents below the September contract and staying within its sideways range in 2017. In outside markets, the September U.S. dollar is quiet, down 0.04 after the U.S. Labor Department said producer prices were down .1% in July and up 1.9% from a year ago. December gold is up $11.60 while North Korea remains a topic of concern.

Soybeans:

November soybeans dropped 33 cents to a new five-week low after USDA estimated this year's soybean yield at a higher-than-expected 49.4 bpa, pointing to a 4.381 bb harvest. USDA's soybean yield estimate was also above pre-report estimates and seems a little high, especially after Thursday's U.S. Drought Monitor just added severe drought conditions to part of northwestern Iowa. Safe to say, Thursday's yield estimates will be discussed in the days ahead, and this summer's crop tours are likely to draw more interest. With the seven-day forecast mostly dry for the central Midwest, USDA's yield estimate may not hold up, but Thursday's increases in the export estimates for both old- and new-crop seasons should. USDA's estimate of old-crop ending soybean stocks fell from 410 to 370 mb while the estimate of new-crop ending stocks increased from 460 mb to 475 mb. USDA's estimate of world ending soybeans stocks increased from 93.53 mmt to 97.78 mmt, boosted in part by a 2.3 mmt reduction in USDA's estimate of old-crop demand. Earlier Thursday, USDA said last week's export sales of soybeans hit a marketing year low of 1.7 mb, but shipments totaled 22.5 mb -- still on a bullish pace in 2016-17 as Thursday's 50 mb increase in USDA's export estimate confirmed. November soybean prices continue to swing in a wide range this summer, and Thursday's lower close changed the trend from up to sideways. DTN's National Soybean Index closed at $9.07 Wednesday, priced 67 cents below the November contract and holding sideways, above $8.80. Among August contracts, there were 39 deliveries of soybeans, 147 deliveries of meal, and 127 deliveries of soybean oil early Thursday. Monday is last trading day for August grain futures and an orderly expiration is expected.

Wheat:

September Chicago wheat closed down 19 cents, hit by USDA's higher-than-expected estimate of world wheat production and bearish response in corn. USDA increased its estimate of world wheat production from 737.83 mmt to 743.18 mmt, thanks largely to a 9-mmt increase from the trio of Russia, Kazakhstan and Ukraine. Those increases far outweighed slight reductions for the U.S., Canada and Europe. While world wheat production is still modestly lower on the year, USDA's global ending stocks estimate of 264.69 mmt is higher than a year ago and represents nearly 36% of annual use. Here in the U.S., USDA's estimate of ending stocks was trimmed from 938 mb to 933 mb or 44% of annual use. Winter wheat production was estimated at 1.29 bb and other spring wheat production was estimated at 402 mb -- both a little higher than expected. Early Thursday, USDA said last week's export sales and shipments of wheat totaled 17.1 mb and 20.9 mb respectively, a bullish combination for the week which has total shipments up 24% from a year ago. Thursday's report sent September Chicago wheat prices to their lowest close in over two months as prices continue to search for support. DTN's National SRW index closed at $4.30 Wednesday, priced 30 cents below the September contract and near its lowest prices in nearly two months. DTN's National HRW index closed at $3.93, also near its lowest prices in nearly two months.

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

Follow him on Twitter @ToddHultman1

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