DTN Before The Bell Grain Comments

Slight Hope Ahead of Thursday's Report

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 4.7 million bushels (120,000 mt) of U.S. corn were sold to Mexico for 2017-18. Corn, soybeans, and all three wheats were steady to a little higher Thursday, an early glimmer of hope ahead of USDA's WASDE report, due out at 11 a.m. CDT. Outside markets were mixed with metals higher and energies lower.

Other Markets:

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

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Corn:

At 8 a.m. CDT, USDA announced 4.7 million bushels (120,000 mt) of U.S. corn were sold to Mexico for 2017-18. December corn was unchanged, still holding slightly above its August low ahead of Thursday's WASDE report at 11 a.m. CDT. USDA's estimate of ending U.S. corn stocks is expected to be trimmed to 2.25 billion bushels while the production estimate stays near 14.2 billion bushels. October's WASDE report takes into account prevented plantings so there is a chance that USDA's acreage estimates could see small reductions. Thursday's weather map is mostly dry across the Corn Belt with rain expected to develop the next few days from eastern Kansas to Michigan and into Canada. The extended forecast looks warm and mostly dry, favorable for further harvest progress. Technically, December corn remains in a downtrend and is trading near its lowest prices of 2017. DTN's National Corn Index closed at $3.02 Wednesday, priced 44 cents below the December contract and still holding above its August low. In outside markets, the December U.S. dollar index is up 0.17 after Fed minutes said it expects GDP growth to pick up in the fourth quarter in response to Hurricanes Harvey and Irma.

Soybeans:

November soybeans were up 2 1/2 cents early, holding steady overall ahead of Thursday's 11 a.m. CDT WASDE report. Dow Jones' survey expects a slightly higher production estimate of 4.44 billion bushels, but a reduction in the estimate of ending U.S. soybean stocks, from 475 to 453 million bushels, thanks to better-than-expected old-crop demand. Traders are also watching developments in Brazil where the seven-day forecast remains dry for central Brazil while beneficial rains are expected in southern Brazil. It seems hard to believe that soybean prices are doing so well in the face of another record harvest, but demand has been good in 2017 and that should continue as FOB soybean prices are currently 21 cents a bushel cheaper at the U.S. Gulf than at Brazil's ports. USDA's weekly update of export sales will be released Friday, due to Columbus Day. The trend remains up in November soybeans with resistance at the September high of $9.87. DTN's National Soybean Index closed at $8.88 Wednesday, priced 77 cents below the November contract and holding a sideways range for over a month.

Wheat:

December Chicago wheat was up 3/4 cent Thursday, finding early support at the lower end of its sideways trading range. Thursday's WASDE report is expected to show a small gain in USDA's estimate of ending U.S. wheat stocks, but wheat prices are already cheap and should not have much reaction. USDA will also tweak its estimates of world production and a surprise is always possible, but big changes are not expected this late in the year. Conditions are favorable for winter wheat planting in the southwestern Plains, but motivation may be lacking with spot Chicago wheat prices near their lowest level in ten years. Technically, the trend in winter wheat is sideways and will likely stay that way for a while, helped by commercial support in the low $4s. DTN's National SRW index closed at $3.94 Wednesday, priced 39 cents below the December contract and holding above its August low.

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

FollowTodd on Twitter @ToddHultman1

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Todd Hultman