DTN Before The Bell Grain Comments

Grains Lower, Harvest Pace Lags

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 Mexico bought 4.5 million bushels (115,000 mt) of U.S. corn and another 5.7 million bushels (146,000 mt) were sold to unknown destinations, both for 2017-18. Corn, soybeans, and winter wheat were starting lower again Tuesday with soybeans and soybean meal down the most, falling back again from last week's bullish response to USDA's new estimates.

Other Markets:

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

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Corn:

At 8 a.m. CDT, USDA announced Mexico bought 4.5 million bushels (115,000 mt) of U.S. corn and another 5.7 million bushels (146,000 mt) were sold to unknown destinations, both for 2017-18. Before the announcements, December corn was down 1 1/4 cents, still struggling to rise above its 2017 lows. USDA said late Monday that 90% of corn was mature and 28% was harvested, down from its five-year average of 47% harvested for this time of year. Fortunately for producers, temperatures are expected to stay warm through most of October and this week's conditions look drier for better harvest progress. Considering 2017 endured a wet spring in the eastern Midwest and drought in the northwestern Plains, 14.28 billion bushels is another big harvest and keeps corn supplies plentiful into 2018. Technically, the downtrend in December corn appears to be leveling, thanks to commercial support at these lower prices, but we probably have to get past harvest before any significant rally can take place. DTN's National Corn Index closed at $3.06 Monday, 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 0.29 and December gold is down $14.90 with unconfirmed talk that President Trump may select a more hawkish Federal Reserve Chairman.

Soybeans:

November soybeans were down 5 1/2 cents early Tuesday, falling back from last week's new two-month high with a week of favorable weather for harvest ahead. USDA said late Monday that 49% of soybeans were harvested, down from the five-year average of 60%. Except for a chance of rain in Missouri, the next five days still look mostly dry before rain develops from the southeastern U.S. into the eastern Midwest on days six and seven. Looking ahead to the next soybean crop, the forecast still looks dry for central Brazil while southern Brazil gets more rain in the southern equivalent of mid-April. Technically, the trend in November soybeans remains up with strong world demand keeping pressure on Brazil to come up with another big harvest in 2018. DTN's National Soybean Index closed at $9.14 Monday, priced 77 cents below the November contract and down from its highest price in over two months.

Wheat:

December Chicago wheat was down 1/4 cent early Tuesday, quietly staying within its sideways range of the past two months. USDA said 60% of winter wheat was planted, but in Kansas, the biggest producing winter wheat state, only 42% has been planted, down from a five-year average of 75%. We don't know what planting estimate USDA has in mind when they release these weekly numbers, but it seems fair to say that the message here is that less winter wheat is being planted than expected as it is difficult to blame the slow planting progress on weather. This year's lack of planting won't have much price impact this winter, but could become more of an issue in the spring of 2018. For now, USDA's estimate of record high world ending wheat stocks is enough to keep prices depressed for the next several months. DTN's National SRW index closed at $3.97 Monday, 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