DTN Closing Grain Comments

Row Crops Hold Firm; Wheat Loses Its Spring

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

General Comments:

Corn closed up 3 1/2 cents in the September contract and up 3 3/4 cents in the December. Soybeans closed up 4 1/4 cents in the September and up 4 3/4 cents in the November. Wheat closed down 1 1/4 cents in the September Chicago, down 7 cents in the September Kansas City, and down 29 1/4 cents in the September Minneapolis. The September U.S. dollar index is down 0.42 at 92.89. December gold is up $4.20 at $1,294.30 while September silver is up $0.03 and September copper is up 0.0100. The Dow Jones Industrial Average is up 46 at 21,890. September crude oil is up $0.17 at $48.76. September heating oil is up $0.0057, September RBOB gasoline is up $0.0046, and September natural gas is down $0.003.

For the week:

September corn closed down 5 3/4 cents and December closed down 6 1/4 cents. September soybeans were down 14 cents while the November was down 11 3/4 cents. September Chicago wheat was down 15 1/2 cents, September Kansas City wheat was down 18 1/4 cents, and September Minneapolis wheat was down 42 1/4 cents.

Corn:

December corn closed up 3 3/4 cents Friday, but was down 6 1/4 cents on the week, bruised by USDA's higher-than-expected yield estimate in Thursday's WASDE report. Statistically speaking, USDA's estimate carries little weight with a 90% confidence interval of plus or minus 20 bushels, but that didn't stop traders from taking December corn prices to new ten-month lows on Thursday. Time has a way of correcting errant price swings, but in this case, time is not on corn's side as seasonal pressure remains bearish until at least early October. In a separate report late Thursday, USDA's Farm Service Agency estimated prevented plantings in corn at 950,344 acres -- a surprisingly low number after this year's wet spring in the eastern Midwest. Indiana, which was one of the wettest states this spring, only showed 32,423 prevented acres. Trading at its lowest prices in ten months, December corn is encouraging more noncommercial liquidation while commercials appear content to take a chance on lower prices at harvest. DTN's National Corn Index closed at $3.17 Thursday, priced 40 cents below the September contract and at the low end of its sideways range in 2017. In outside markets, the September U.S. dollar index is down 0.42 after the U.S. Labor Department said consumer prices were up .1% in July and up 1.7% from a year ago, still below the Federal Reserve's targeted level.

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Soybeans:

November soybeans closed up 4 3/4 cents Friday, but not enough to erase its 11 3/4 cent deficit for the week. For the past month, November soybean prices have chopped lower as rain forecasts have come and gone and temperatures turned from hot to mild. Including Thursday's higher-than-expected soybean production estimate of 4.38 billion bushels from USDA, it seems somewhat remarkable that prices are only down a dollar from this year's high. The bullish part of the equation often overlooked is this year's higher pace of soybean export demand, which USDA acknowledged on Thursday with another 50 million bushel increase in the export estimate. USDA also said early Friday that China bought 2.2 million bushels (60,000 mt) of U.S. soybeans for 2016-17 and another 2.2 million bushels for 2017-18. In Thursday's other report, USDA's Farm Service Agency said its first estimate of prevented soybean acres totaled 436,610 -- a small amount that will not have much impact on this fall's harvest. November soybeans are at their lowest prices since late June, where commercials were previously long. DTN's National Soybean Index closed at $8.74 Thursday, priced 66 cents below the November contract and at its lowest price in over a month. Among August contracts, there were five deliveries of soybeans, 138 deliveries of meal, and 70 deliveries of soybean oil early Friday. August grain contracts expire early on Monday, Aug. 14.

Wheat:

September K.C. wheat ended down 7 cents Friday at its lowest close in over three months after USDA predicted the highest world ending wheat stocks on record for 2017-18. As mentioned this morning, some will correctly point out that China and India hold over 5 billion of the 9.73 billion bushels of ending wheat stocks that USDA estimates and they do not export, but there is still plenty to go around. If there were any argument about that, we need look no further than the futures spreads in winter wheat to see that the market is paying more than the cost of carry to entice producers to hang on to their wheat -- not a bullish scenario. Even the Sep/Dec Minneapolis wheat spread lost the bullish inverse that accompanied drought concerns in June. If there is anything bullish to say for wheat prices, it is that they should be able to find a higher trading range for the remainder of 2017 than they saw last year, thanks to this year's lower U.S. production totals. Thursday afternoon's report from USDA's Farm Service Agency said its first estimate of prevented wheat acres totaled 613,884, one more bit of help to support this year's wheat prices. DTN's National SRW index closed at $4.11 Thursday, priced 30 cents below the September contract and at its lowest price in two months. DTN's National HRW index closed at $3.81, also at its lowest price in two months.

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

Follow him on Twitter @ToddHultman1

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Todd Hultman