DTN Closing Grain Comments

December Corn Tumbles To New Low

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

General Comments:

Corn was down 4 cents in the September contract and down 4 1/4 cents in the December. Soybeans were up 1 1/4 cents in the September contract and up 1/2 cent in the November. Wheat closed up 1 cent in the December Chicago contract, down 1 1/4 cents in the December Kansas City, and up 3/4 cent in the December Minneapolis contract. The September U.S. dollar index is down 0.33 at 93.13. December gold is up $3.60 at $1,294.60 while September silver is up 7 cents and September copper is down $0.0040. The Dow Jones Industrial Average is down 72 at 21,828. October crude oil is up $0.60 at $48.43. October heating oil is up $0.0312 while October RBOB gasoline is up $0.0300 and October natural gas is down $0.009.

Corn:

December corn closed down 4 1/4 cents Wednesday, falling below its previous contract low of $3.58 1/2 from Aug. 31, 2016, after trading as high as $4.17 1/4 on July 11. There is no question that this year's corn crop will be smaller than a year ago, but with 2.37 billion bushels of old-crop carry, futures spreads and commercials in general are showing no signs of concern about obtaining corn in 2017-18, so we continue to watch prices slide lower ahead of harvest. The seasonal tendency for this move typically plays out in early October, which means we may have a way to go yet before buyers start taking advantage of corn's low prices. The latest seven-day forecast is mostly dry across the Midwest, except for rain in Minnesota over the weekend. Temperatures are expected to stay mild and there is no talk of early freeze in the forecast to date. December corn continues to trend lower as we approach harvest with no interest from potential buyers yet. DTN's National Corn Index closed at $3.09 Tuesday, priced 37 cents below the September contract and at a new 2017 low. In outside markets, the September U.S. dollar index is down 0.33, staying near its lowest prices in two years ahead of Friday's speeches from Federal Reserve President Yellen and European Central Bank President Draghi at Jackson Hole, Wyoming.

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Soybeans:

November soybeans closed up a half-cent Wednesday, caught in a crossfire of conflicting news. Late Tuesday, soybean oil prices got a bullish boost after the U.S. Commerce Department announced a new countervailing duty against biodiesel imports from Argentina and Indonesia that would also be applied to imports over the past 90 days (see Tuesday's DTN article, "Retroactive Duty Imposed" by Staff Reporter Todd Neeley). On Wednesday morning, USDA offset that bullish news, reporting China cancelled 23.6 million bushels (640,970 mt) of old-crop U.S. soybean sales. USDA also announced new soybean sales of 412,000 bushels (11,220 mt) of old-crop and 10.4 million bushels of new-crop for unknown destinations. Before Wednesday, total U.S. old-crop soybean sales exceeded USDA's export estimate by 98 million bushels so the cancellation was bearish, but not devastating to soybean prices. The more important factor for soybeans moving forward is that FOB soybean prices remain attractively priced for more U.S. business, currently trading 9 cents a bushel cheaper than at Brazil's ports. With a record harvest still possible, November soybeans remain under bearish pressure, but continue to hold above their June low at $9.07. DTN's National Soybean Index closed at $8.76 Tuesday, priced 61 cents below the November contract and holding above its lows in June.

Wheat:

December Chicago wheat closed up a penny in another quiet day of trading with pleasant weather over most of the country and spring wheat harvest making steady progress. With U.S. wheat production expected to be down 25% or more in 2017 and Canada's production estimated 16% lower, this month's sell-off back to the lows of 2017 for spot Chicago and K.C. wheat prices seems excessive, but increases in Europe and Russia are keeping world wheat supplies high. K.C. and Minneapolis wheat also still have failed noncommercial trades to liquidate, left over from the early July rally. Unless there is a surprise lurking in Canada's harvest numbers, winter wheat prices should be close to finding support for a sideways trading range for the rest of the year. DTN's National SRW index closed at $3.74 Tuesday, priced 28 cents below the September contract and at its lowest price in over three months. DTN's National HRW index closed at $3.33, its lowest price in over three months.

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

Follow Todd on Twitter @ToddHultman1

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Todd Hultman