DTN Before The Bell Grain Comments

Grains Show Pre-Report Blues

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 China bought 9.7 million bushels (264,000 mt) of U.S. soybeans and 4.85 million bushels were sold to unknown, both for 2017-18. Mexico bought 5.9 million bushels (150,000 mt) of U.S. corn and 3.8 million bushels (104,202 mt) of hard red winter wheat, both for 2017-18. Corn, soybeans, and all three wheats were a little lower earlier Wednesday as traders prepare for Thursday's WASDE report.

Other Markets:

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

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Corn:

At 8 a.m. CDT, USDA announced Mexico bought 5.9 million bushels (150,000 mt) of U.S. corn for 2017-18. Earlier, December corn was down 1 1/2 cents Wednesday, trolling the bottom end of its 2017 range ahead of Thursday's WASDE report. USDA may reduce its estimate of U.S. ending corn stocks a little, based on the lower-than-expected corn stocks found on Sep. 1, but Dow Jones' survey expects this year's production estimate to stay near 14.2 billion bushels. That doesn't mean a surprise can't happen as this year saw a wide range of variable conditions. Rain is falling around the Great Lakes Wednesday, but conditions are dry elsewhere, favorable for harvest progress. Late Tuesday, USDA said 82% of the corn crop was now mature, but only 22% was harvested, down from its five-year average of 37% for this time of year. Technically, December corn remains in a downtrend, but has not seen a new low since August. DTN's National Corn Index closed at $3.05 Tuesday, priced 44 cents below the December contract and has held roughly even for over a month. In outside markets, the December U.S. dollar index is down 0.19 and other commodities are mixed.

Soybeans:

At 8 a.m. CDT, USDA announced China bought 9.7 million bushels (264,000 mt) of U.S. soybeans and 4.85 million bushels were sold to unknown, both for 2017-18. Before the announcements, November soybeans were down a quarter-cent, trapped in the middle of a sideways range with a possible record harvest on the way, offering resistance and persistent demand offering support. Late Tuesday, USDA said 36% of soybeans were harvested, down from their five-year average of 43% for this time of year. The five-day forecast expects moderate rains from northern Missouri to Michigan and Ontario, but drier, more favorable conditions everywhere else. Thursday's WASDE report will give an update of soybean ending stocks estimates and for the U.S., Dow Jones' survey expects USDA to lower its estimate from 475 to 453 million bushels. Looking forward, central Brazil's new season is off to a dry, early start and this week's forecast still looks dry. Technically, the trend remains up for November soybeans with resistance at the September high of $9.87. DTN's National Soybean Index closed at $8.88 Tuesday, priced 78 cents below the November contract and holding a sideways range for over a month.

Wheat:

At 8 a.m. CDT, USDA announced Mexico bought 3.8 million bushels (104,202 mt) of hard red winter wheat for 2017-18. December Chicago wheat was down 2 cents earlier Wednesday, drifting back toward its lows for 2017 as the new winter crop is slowly being planted. USDA said late Tuesday that 48% of winter wheat was planted and 25% of it was emerged, both behind their usual paces. In Kansas, only 27% of winter wheat has been planted compared to a five-year average of 59% and it is fair to wonder if the reason is that less is being planted again this year. The seven-day forecast is mostly dry for the southwestern Plains, favorable for any that want to keep planting. Thursday's WASDE report is likely to show a slight increase in USDA's estimate of U.S. ending wheat stocks, but otherwise should not have much impact on prices. Technically, Chicago wheat prices are holding sideways and will likely continue that way, thanks to commercial support in the low $4s. DTN's National SRW index closed at $3.96 Tuesday, priced 39 cents below the December contract and down from its highest price in six weeks.

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

FollowTodd on Twitter @ToddHultman1

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Todd Hultman