DTN Before The Bell Grain Comments

Row Crops Start a Little Lower

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 8.35 million bushels (227,300 mt) of U.S. soybeans were sold to unknown destinations for 2017-18. Earlier, corn and soybeans were starting a little lower with a favorable week of harvest weather expected ahead on the heels of a rainy weekend across the central Midwest. Chicago wheat is slightly higher with no credible estimate yet of how much winter wheat will be planted this fall.

Other Markets:

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

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Corn:

December corn was down 3/4 cent early Monday after a quiet overnight session. The next five days are expected to be mostly dry across the Corn Belt with warm temperatures allowing for excellent harvest conditions as we move to the second half of October. Rains are expected to return to the central Plains at the back end of the ten-day forecast. Last week's WASDE report gave corn a slightly higher 2.43 billion bushel estimate of ending U.S. corn stocks. Overall however, a large fall harvest has been anticipated for a long time and December corn has already been showing signs of finding seasonal support at these cheaper prices. Friday's CFTC data showed noncommercials modestly bearish in corn with 61,660 net shorts as of Oct. 10. Commercials increased net longs to 42,145 contracts -- a good sign of the support one would expect for December corn in the mid $3s. The downtrend in December corn appears to be leveling out as we get farther into harvest. DTN's National Corn Index closed at $3.08 Friday, priced 43 cents below the December contract and still holding above its August low. In outside markets, November crude oil is up $0.82 after Iraq's military said it took back oil fields near Kirkuk from Kurdish control.

Soybeans:

At 8 a.m. CDT, USDA announced 8.35 million bushels (227,300 mt) of U.S. soybeans were sold to unknown destinations for 2017-18. Before the announcement, November soybeans were down 3 1/2 cents, pulling back from Friday's highest close in over two months with favorable harvest conditions expected this week across the Midwest. Weekend showers across the central Midwest plus last week's rains may show slower progress in Monday afternoon's harvest update from USDA, but no serious threats are expected to prevent this year's completion. Attention is slowly shifting to Brazil where early conditions remain dry in central Brazil and are wetter in southern Brazil. Friday's CFTC data showed noncommercials lightly bullish in soybeans with 44,243 net longs as of Oct. 10. Technically, the trend remains up in November soybeans. In spite of a record U.S. harvest expected this fall, soybean supplies in Brazil remain relatively tight and are helping to support U.S. prices. DTN's National Soybean Index closed at $9.23 Friday, priced 77 cents below the November contract and at its highest price in over two months.

Wheat:

December Chicago wheat was up 1 3/4 cents early Monday, keeping a sideways course since August, even after USDA estimated record high ending world wheat stocks last week of 268.13 mmt or 9.85 billion bushels for 2017-18. This year's higher ending wheat stocks is a disappointment for U.S. and other wheat producers as the season saw significant production cuts from the U.S., Canada, and Australia. Later Monday morning, USDA will release its weekly report of U.S. export inspections, but recent numbers have been low for wheat, hurt by increased competition from Russia and Europe. Friday's CFTC data showed noncommercials lightly bearish in Chicago wheat with 24,055 net shorts as of Oct. 10. Commercials increased net longs to 31,857 contracts, attracted to wheat's economic value at these low prices. That commercial attraction is what should keep Chicago wheat prices supported in the low $4s as the northern Hemisphere heads into winter. Currently, there is no bullish fundamental argument for wheat prices. DTN's National SRW index closed at $4.00 Friday, priced 40 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