DTN Closing Grain Comments

General Comments:

Corn was down 5 1/2 cents in the September contract and down 6 cents in the December. Soybeans were down 10 1/2 cents in the September contract and down 9 1/2 cents in the November. Wheat closed up 7 1/4 cents in the December Chicago contract, up 7 cents in the December Kansas City, and down 1/2 cent in the December Minneapolis contract. The September U.S. dollar index is down 0.02 at 91.83. December gold is down $0.70 at $1,335.00 while December silver is up 3 cents and December copper is down $0.0290. The Dow Jones Industrial Average is up 58 at 22,114. October crude oil is up $0.15 at $48.22. October heating oil is down $0.0016 while October RBOB gasoline is up $0.0230 and October natural gas is up $0.048.

Corn:

December corn closed down 6 cents Tuesday, pressured by higher crop and yield estimates from USDA's September WASDE report, but also finished 6 cents above its low. Even though most were expecting a lower corn yield estimate this month, USDA raised it a notch to 169.9 bushels per acre, resulting in a higher-than-expected 14.18 billion bushel crop estimate. Add to that a 50 million bushel reduction in the demand estimate and USDA's estimate of U.S. ending corn stocks climbed from 2.273 billion to 2.335 billion bushels for 2017-18. At 16.4% of annual use and staying clearly above 2 billion bushels, USDA's estimates remain an ongoing source of bearish pressure on corn prices. USDA also increased its estimate of world ending corn stocks to a higher-than-expected 202.47 mmt, largely due to a reduction in world demand of over 4 mmt. Finally, it is important to note that USDA will re-survey southern states recently hit by Hurricane Harvey and Hurricane Irma and expects to have those results in the Oct. 12 WASDE report. Tuesday's report and bearish price response keeps December corn in a downtrend and puts prices at risk of taking out the August low. DTN's National Corn Index closed at $3.13 Monday, priced 45 cents below the December contract and up from its lowest price in nine months. There were no deliveries of September corn early Tuesday. In outside markets, the September U.S. dollar index is quiet, trading up 0.01 while most outside commodities are mixed. December cotton ended down its 3-cent limit.

Soybeans:

November soybeans closed down 9 1/2 cents Tuesday, pressured by a higher-than-expected soybean crop estimate of 4.43 billion bushels, based on a yield of 49.9 bushels an acre. As with corn, soybeans' lower close hides the fact that prices were down 22 1/2 cents right after the report was released. Not all of USDA's adjustments for soybeans were bearish as the old-crop estimate of U.S. ending stocks dropped from 370 million to 345 million bushels and the new-crop estimate of ending stocks stayed at 475 million bushels, helped by a 25 million bushel increase in the export estimate. Fundamentally, the numbers for soybeans were neutral, but the emotional response to the higher crop estimate was bearish and added to concerns that even though demand has been active, soybean supplies continue to keep up. USDA slightly reduced its estimate of world ending soybean stocks to 97.53 mmt, helped by a 1 mmt increase in the demand estimate for China. Time will tell if Tuesday's lower close is a correction in the new uptrend or did actual damage to the bullish case for soybean prices. Commercials will also play an important part as they have supported November soybean prices in the low $9s so far. Early Tuesday, USDA said 4.85 million bushels (132,000 mt) of U.S. soybeans were sold to unknown destinations for 2017-18. DTN's National Soybean Index closed at $8.95 Monday, priced 65 cents below the November contract and near its highest price in four weeks. Among September contracts, delivery intentions totaled 128 for soybean meal, 356 for soybean oil, and none for soybeans early Tuesday.

Wheat

December Chicago wheat closed up 7 1/4 cents Tuesday, surviving USDA's report with neutral adjustments to both, domestic and world wheat numbers. Here in the U.S., wheat's ending stocks estimate for 2017-18 remained unchanged at 933 million bushels. USDA reduced its estimate of 2017-18 world ending wheat stocks from 264.69 mmt to 263.14 mmt, thanks to a revision from a previous year. Hidden among the numbers was a 3.5 mmt increase in the production estimate for Russia, now at 81 mmt or nearly 3 billion bushels. Back in the U.S. again, winter wheat planting is just getting started and, according to USDA, 5% of the wheat is in, just as 5% of the spring wheat crop still needs to be harvested. Technically, winter wheat prices remain in a downtrend, but Tuesday's higher close was a bullish outside reversal. With commercials net long in Chicago wheat, prices are cheap enough to have support for a sideways trading range, but there is no strong bullish argument for wheat prices at this time. DTN's National SRW index closed at $3.89 Monday, priced 46 cents below the December contract and up from its lowest price in four months. DTN's National HRW index closed at $3.52, up from its lowest price in four months. Among September wheat contracts, delivery intentions totaled seven for Chicago, 42 for K.C., and one for Minneapolis early Tuesday. September grain futures expire early on Thursday, Sep. 14.

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

Follow Todd on Twitter @ToddHultman1

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