DTN Closing Grain Comments

Soybeans Higher After USDA Cut Ending Stocks

Todd Hultman
By  Todd Hultman , DTN Grains Analyst
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(DTN illustration by Nick Scalise)

General Comments:

Corn was up 3 cents in the December contract and up 3 1/2 cents in the July. Soybeans were up 26 3/4 cents in the November contract and up 25 3/4 cents in the July. Wheat closed down 2 3/4 cents in the December Chicago contract, down 2 cents in the December Kansas City, and down 7 3/4 cents in the December Minneapolis contract. The December U.S. dollar index is down 0.01 at 92.82. December gold is down $8.10 at $1,297.00 while December silver is up 14 cents and December copper is up $0.0280. The Dow Jones Industrial Average is down 18 at 22,855. November crude oil is down $0.64 at $50.66. November heating oil is down $0.0151 while November RBOB gasoline is down $0.0253 and November natural gas is up $0.110.

Corn:

December corn closed up 3 cents Thursday, helped by a rally in soybeans and in spite of bearish numbers from USDA's latest estimates. USDA estimated this year's harvest at 14.28 billion bushels, based on a higher yield of 171.8 bushels per acre and a slightly lower estimate of 83.1 million harvested acres. The higher yield estimate offset the anticipated reduction in old-crop ending stocks and resulted in a slightly higher new-crop U.S. ending stocks estimate of 2.34 billion bushels. USDA's estimate of world ending corn stocks was reduced from 202.47 mmt to 200.95 mmt, helped by a large, 7.7 mmt increase in USDA's estimate of world corn demand. Rain is expected to delay harvest activity the next few days from eastern Kansas to Michigan and into Canada, but conditions should be more favorable elsewhere and after Saturday. U.S. FOB corn prices are 14 cents higher than at Brazil's ports, but some export business is being done. Eariler Thursday, USDA reported 4.7 million bushels (120,000 mt) of U.S. corn were sold to Mexico for 2017-18. Technically, the trend remains down in December corn, but Thursday's rejected attempt of a new low is another sign of support at these cheap prices. 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 down 0.01 after the U.S. Labor Department said producer prices were up .4% in September and up 2.6% from a year ago.

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Soybeans:

November soybeans ended up 26 3/4 cents Thursday at its highest close in over two months, getting an excited lift from USDA's lower-than-expected 430 million bushel estimate of U.S. ending stocks. Much of Thursday's reduction was anticipated from USDA's Sep. 29 Grain Stocks report, but another part of soybeans' bullish response was simply relief that the production estimate stayed even with September's 4.43 billion bushels. Harvested acres were increased from 88.7 million to 89.5 million while soybean yield was trimmed from 49.9 to 49.5 bushels. USDA reduced its estimate of world ending soybean stocks from 97.53 mmt to 96.05 mmt, due to minor tweaks, including a slight increase in China's demand estimate. In addition to USDA's estimates, DTN also continues to monitor dry conditions in central Brazil -- another potential source of anxiety for anyone caught short soybeans. Technically, the trends remains up in both, November soybeans and December soybean meal. 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 closed down 2 3/4 cents in spite of trading higher when USDA's report was first released. The content of Thursday's report was bearish for wheat with USDA increasing its estimate of U.S. ending stocks from 933 million to 960 million bushels and its estimate of world ending wheat stocks from 263.14 mmt to 268.13 mmt -- both of which were higher than expected. In the U.S., a 30 million bushel reduction in feed demand accounted for most of the higher ending stocks. Among world estimates, big increases in crop estimates for the European Union, India, and Russia were responsible for most of the gain in ending stocks. For a year that saw significant crop reductions in the U.S., Canada, and Australia, it has been disappointing for wheat producers that world production is projected to exceed demand for a fifth consecutive year. Technically, the trend in Chicago wheat remains sideways with prices cheap enough to attract 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. DTN's National HRW index closed at $3.52 and is also holding above its August low.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman