DTN Closing Grain Comments

Winter Wheat Falls to New Lows, Puts Scare Into Corn

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

General Comments:

Corn was down 3 cents in the December contract and down 3 cents in the July. Soybeans were up 1/4 cent in the January contract and unchanged in the July. Wheat closed down 6 1/4 cents in the December Chicago contract, down 5 1/4 cents in the December Kansas City, and down 5 3/4 cents in the December Minneapolis contract.

The December U.S. dollar index is down 0.03 at 94.42. December gold is down $6.30 at $1,271.40 while December silver is down 13 cents and December copper is down $0.0005. The Dow Jones Industrial Average is up 24 at 23,373. December crude oil is up $0.35 at $54.50. December heating oil is up $0.0072 while December RBOB gasoline is up $0.0211 and December natural gas is down $0.083.

Corn:

December corn ended down 3 cents Tuesday, once again testing its lows of 2017 while the corn harvest makes slow progress. Late Monday, USDA said 54% of corn was harvested, still below the five-year average of 72% but is also ready to get more active now that more soybean fields are finishing. Snow is expected in the Northern Plains this week and rain may interrupt harvest in the eastern Midwest later in the week, but harvest conditions are otherwise expected to be favorable for the rest of the Corn Belt. With USDA expecting another 6.5 billion bushels of new supply still on the way (46% of the 14.3 bb estimated) and corn exports running slow, Tuesday's new low in winter wheat prices are also likely keeping noncommercial traders away from corn. For now, the trend in December corn remains sideways, holding above the October low of $3.42 1/2. DTN's National Corn Index closed at $3.06 Monday, priced 43 cents below the December contract and is still holding above its August low. In outside markets, the December U.S. dollar index is down 0.03 after RTTNews.com reported real GDP up 2.5% in the European Union in the third quarter from a year ago, slightly higher than expected.

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Soybeans:

January soybeans closed up a quarter-cent Tuesday with commercial buying able to support a small gain while corn and wheat prices fell lower. Here in the U.S., the soybean harvest is in line with its usual pace at 83% finished, USDA said late Monday. It also helps that North Dakota and Minnesota are 96% and 95% complete respectively with snow expected in those northern states starting on Wednesday. Brazil's soybean crop is off to a rocky start this new season, but central Brazil is expecting helpful showers in the week ahead. Early concerns have FOB soybean prices 34 cents higher at Brazil's ports than at the U.S. Gulf and that should help U.S. exports stay active. Technically, the trend remains up in January soybeans, but prices have been quietly holding below $10.00 while this year's harvest nears its final laps. DTN's National Soybean Index closed at $8.94 Monday, priced 79 cents below the November contract and down from its highest price in over two months.

Wheat:

December Chicago wheat fell 6 1/4 cents to a new contract low at $4.18 1/2 and December K.C. wheat was down 5 1/4 cents to a new contract low of $4.16 1/2. Of course, Tuesday's new low is bearish and comes at a time when both, domestic and world wheat supplies are plentiful and U.S. exports are struggling. Part of the bearishness however, is from the disappearance of carry in futures contracts over time as cash winter wheat prices are still above their lows for 2017. Late Monday, USDA said 84% of winter wheat was planted and 65% of the crop was emerged, both a little lower than their usual paces. What USDA is not saying yet however, is how many acres of winter wheat they expect to be planted this fall. So far in 2017-18, U.S. wheat shipments are down 6% from a year ago, but they appear to have gotten some help Tuesday when USDA said Iraq bought 3.7 million bushels (100,000 mt) of HRW wheat for 2017-18. Technically, the trend in December Chicago wheat has turned lower, but with commercials already net long, it is difficult to expect much bearish potential at these low prices. DTN's National SRW index closed at $3.88 Friday, priced 37 cents below the December contract and still holding above its August low. DTN's National HRW index closed at $3.51, 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