DTN Before The Bell Grain Comments

To Heck With Tuesday, Grains Start Higher

Todd Hultman
By  Todd Hultman , DTN Grains Analyst
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(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

At 8 a.m. CDT, USDA announced Mexico bought 6.15 million bushels (167,370 mt) of U.S. soybeans for 2017-18. Corn and soybean prices were starting modestly higher on the morning after USDA gave the world higher crop estimates for both and sparked a session of heavy volume selling.

Other Markets:

Dow Jones: Lower
U.S. Dollar Index: Lower
Gold: Higher
Crude Oil: Higher

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Corn:

December corn was up 2 1/4 cents early Wednesday, showing a little more composure as the initial selling reaction to Tuesday's higher crop estimate of 14.18 billion bushels wears down. The 169.9 bushels an acre yield estimate will be debated until October's WASDE report, but the real key for prices at this time will depend largely on commercial attitudes. Commercials have been slow to respond to corn's lower prices after their August sell-off, but corn's ability to survive Tuesday's report with minimal losses may be a clue that commercials are finally starting to find value at these lower levels. Wednesday's weather map shows rain around western Kentucky, but the five-day forecast continues to show the best rain chances in the northwestern Plains and northern Midwest while the rest of the Corn Belt stays mostly dry. Fortunately for this year's slower developing corn crop, the seven-day forecast remains safely warm, allowing crops time to mature. Technically, December corn remains in a downtrend, but the August low of $3.44 1/4 remains a candidate for this year's seasonal low. DTN's National Corn Index closed at $3.07 Tuesday, priced 45 cents below the December contract and up from its lowest price in nine months. There were 375 deliveries of September corn early Wednesday. In outside markets, the September U.S. dollar index is down 0.06 while December gold is up $4.40 and October crude oil is up 41 cents.

Soybeans:

At 8 a.m. CDT, USDA announced Mexico bought 6.15 million bushels (167,370 mt) of U.S. soybeans for 2017-18. Earlier, November soybeans were up 4 1/4 cents, taking back part of Tuesday's WASDE-related loss. Going by the numbers, soybeans has a better case to make as USDA's estimate of old-crop soybean ending stocks was reduced and the new-crop estimate stayed unchanged at 475 million bushels. Granted, USDA's soybean crop estimate of 4.43 billion bushels, if true, will be another record U.S. harvest and big bearish image for traders to digest. But keep in mind that 344 mmt of world soybean demand is also a new record and is expected to keep world supplies close to current levels in 2017-18. And it is too early for markets to care, but worth mentioning that conditions have been dry in Brazil this month as a new planting season gets underway. While U.S. crops mature in the field, November soybeans are maintaining their uptrend, thanks to active commercial demand at these prices. DTN's National Soybean Index closed at $8.85 Tuesday, priced 66 cents below the November contract and near its highest prices in four weeks. Among September contracts, delivery intentions totaled 118 for soybean meal, 340 for soybean oil, and there were none for soybeans early Wednesday.

Wheat:

December Chicago wheat was up 4 cents early Wednesday, showing some relief at having survived a WASDE report which showed Russia producing nearly 3 billion bushels of wheat this year. USDA's domestic estimates were kept unchanged and left U.S. ending wheat stocks at 933 million bushels. USDA's report held no bullish arguments for wheat, but the fact that Chicago wheat prices put in a bullish outside reversal on Tuesday is another clue that prices have reached cheap enough levels to have support for a sideways trading range. The five-day forecast for winter wheat continues to look mostly dry across the southern Plains where a new season of planting has just begun. Technically, December Chicago wheat remains in a downtrend, but prices are showing signs of levelling out in the low $4s. DTN's National SRW index closed at $3.97 Tuesday, priced 45 cents below the December contract and up from its lowest prices in four months. Among September wheat contracts, delivery intentions totaled 18 for Chicago, 35 for K.C., and 1 for Minneapolis early Wednesday. Trading in September grain futures is dangerously thin and contracts officially expire early on Thursday, Sep. 14.

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

FollowTodd on Twitter @ToddHultman1

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Todd Hultman