DTN Before The Bell Grain Comments

Grains Show Firmer Tone Early Thursday

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 7.3 million bushels (198,000 mt) of U.S. soybeans were sold to China for 2017-18, starting the fifth consecutive trading session with a soybean sale. Corn, soybeans, and all three wheats were starting higher Thursday with commercial buying evident in soybean meal and winter wheat.

Other Markets:

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

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Corn:

December corn was up 2 cents early Thursday, still showing a firmer tone after Tuesday's bearish crop estimates from USDA. Late Wednesday, the U.S. Grains Council reported a delegation from Taiwan pledged to buy 5 mmt of U.S. corn and a half-million tons of dried distillers grains between 2018 and 2019. The news is not immediately bullish, but it may have contributed a little to Thursday's higher start. USDA released its first week of export sales and shipment data for 2017-18, posting 41.2 and 28.1 million bushels respectively, a neutral combination for the week. Technically, the trend in December corn remains down, but the refusal of prices to trade near the August low of $3.44 1/4 is one clue that the seasonal low may already be in. DTN's National Corn Index closed at $3.07 Wednesday, priced 45 cents below the December contract and up from its lowest price in nine months. There were 87 deliveries of September corn early Thursday, the final day of trading for September grain futures. In outside markets, the September U.S. dollar index is down 0.10 after the U.S. Labor Department said consumer prices were up .4% in August and up 1.9% from a year ago, slightly more than expected reported Dow Jones.

Soybeans:

At 8 a.m. CDT, USDA announced 7.3 million bushels (198,000 mt) of U.S. soybeans were sold to China for 2017-18, starting the fifth consecutive trading session with a soybean sale. November soybeans were up 5 1/2 cents earlier Thursday, continuing to rebound after USDA estimated record soybean production of 4.43 billion bushels on Tuesday. The comeback of prices has been accompanied by commercial buying in both, soybeans and meal which speaks well of the market's current demand for soybeans. It is also possible that the market simply does not believe USDA's big crop estimate as rain has been sparse the last 30 days from central Iowa to Indiana. Early Thursday, USDA said last week's export sales and shipments of 2017-18 soybeans totaled 59.2 and 42.3 million bushels respectively, a neutral combination for the week. The new season's first week of shipments is down 6% from a year ago and below USDA's estimated pace for a 4% gain in exports. In spite of USDA expecting a record fall harvest of soybeans, the trend in November soybeans remains up. Also, it is still early, but worth noting that Brazil's planting season is off to a dry start with the forecast looking dry for the week ahead. DTN's National Soybean Index closed at $8.94 Wednesday, priced 66 cents below the November contract and down from its highest prices in four weeks. Among September contracts, delivery intentions totaled 115 for soybean meal, 316 for soybean oil, and there were none for soybeans early Thursday.

Wheat:

December Chicago wheat was up 4 1/2 cents, boosted by early commercial buying even though prices are near their highest levels in over three weeks. It also may be helping prices that temperatures are expected to be hot in the southwestern Plains for the next five days. So far, this week's higher prices for winter wheat have been a good sign that the constant selling pressure of the past two months has finally backed off and prices have become cheap enough for commercials to be interested again. Tuesday's bullish reversal also suggested that the market sees USDA's estimates of record high world ending wheat stocks as old news. Early Thursday, USDA said last week's export sales and shipments of wheat totaled 11.6 and 16.4 million bushels respectively, lower amounts that were still likely affected by Hurricane Harvey. Even so, actual wheat shipments in 2017-18 are up 3% from a year ago and above USDA's expectations for an 8% drop in exports. While both winter wheats remain in a downtrend, prices are levelling out and the increased interest among commercials for Chicago wheat suggests that the market is ready to support prices in a sideways range. DTN's National SRW index closed at $3.99 Wednesday, priced 44 cents below the December contract and up from its lowest prices in four months. Among September wheat contracts, delivery intentions totaled 4 for Chicago, 19 for K.C., and 1 for Minneapolis early Thursday, the final day of trading for September futures contracts.

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

FollowTodd on Twitter @ToddHultman1

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Todd Hultman