DTN Closing Grain Comments

Soybeans Fall Lower, Expecting Rain in Brazil

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

General Comments:

Corn closed down 2 1/4 cents in the December contract and down 1 1/2 cents in the July. Soybeans closed down 12 1/2 cents in the January and down 11 3/4 cents in the July. Wheat closed down 1/4 cent in the December Chicago, up 1 cent in the December Kansas City, and up 2 cents in the December Minneapolis. The December U.S. dollar index is up 0.31 at 94.89. December gold is down $9.20 at $1,268.90 while December silver is down $0.32 and December copper is down 0.0240. The Dow Jones Industrial Average is up 25 at 23,541. December crude oil is up $0.97 at $55.51. December heating oil is up $0.294, December RBOB gasoline is up $0.0180, and December natural gas is up $0.058.

For the week:

December corn closed down 1/2 cent and July closed down 1/2 cent. January soybeans were down 1/4 cent while the July was up 1 cent. December Chicago wheat was down 1 1/2 cents, December Kansas City wheat was up 1 1/2 cents, and December Minneapolis wheat was up 7 3/4 cents.

Corn:

December corn closed down 2 1/4 cents Friday and was down a half-cent on the week, still holding in its sideways range of the past two months. Friday's selling pressure was likely related to central Brazil's forecast for beneficial rains the next seven days as traders start to pay more attention down south. Here in the U.S., snow in the Northern Plains and rain in the eastern Midwest is adding to corn harvest challenges, but the weather across the rest of the Corn Belt looks favorable. With USDA expecting 2.34 billion bushels of excess corn in 2017-18, all exports are needed, but probably won't be enough to significantly trim supplies. Early Friday, USDA said Korea bought 5.3 million bushels (135,000 mt) of U.S. corn and Mexico bought 4.0 million bushels (102,400 mt), both for 2017-18; 9.9 million bushels (251,000 mt) of sorghum were sold to an unnamed destination for 2017-18. USDA's monthly report of ethanol exports showed September's volume down 12% from a year ago with Canada as the top destination. Technically, the trend in December corn remains sideways with USDA getting ready to update its harvest estimates on Nov. 9. DTN's National Corn Index closed at $3.09 Thursday, priced 41 cents below the December contract and is still holding above its August low. In outside markets, the December U.S. dollar index is down 0.13 after the U.S. Labor Department said nonfarm payrolls increased 261,000 in October, less than was expected. The U.S. unemployment rate fell from 4.2% in September to 4.1% in October.

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Soybeans:

January soybeans closed down 12 1/2 cents, erasing this week's earlier gain in one swoop with traders responding to Friday's forecast of beneficial rains across central Brazil the next seven days. As we often experience here in the U.S., weather changes early in the growing season can happen quickly and make for volatile trading. Eastern Mato Grosso and Goias in particular have had a dry start to the new season, but there is still time for rains to make grain, provided the forecasts come through. Friday's FOB soybean prices at Brazil's ports are 29 cents higher than those at the U.S. Gulf. Those prices can also change quickly, but so far, they favor more U.S. export business ahead. With USDA expecting Brazil to have only 184 million bushels of soybeans at the end of their current season on Jan. 31, there is a fine line between adequate supplies and tight supplies in 2018 and that is why prices are likely to be jumpy about weather in the months ahead. For now, the trend in January soybeans remains up with resistance at $10.13. DTN's National Soybean Index closed at $9.15 Thursday, priced 85 cents below the January contract and down from its highest price in over two months. Forty-nine delivery intentions were reported for November soybeans early Friday.

Wheat:

December Chicago wheat closed down a quarter-cent Friday and was down 1 1/2 cents on the week. Halloween saw winter wheat prices drop to new contract lows and while prices regained that lost ground, we continue to see a pattern of shrinking premiums in futures prices while cash winter wheat prices have stayed roughly steady since late-August. As long as winter wheat supplies are plentiful or until some surprise emerges, this is likely going to be the trading pattern winter wheat prices stay in the next several months. Wheat did get a little bullish news early Friday when USDA said Iraq bought 11.0 million bushels (300,000 mt) of U.S. HRW wheat for 2017-18, but overall, exports have not been large enough to make a dent in current U.S. supplies. Technically, the trends in both Chicago and K.C. wheat are down, but at these cheap levels, downside potential should be limited. DTN's National SRW index closed at $3.91 Thursday, priced 35 cents below the December contract and holding above its August low. DTN's National HRW index closed at $3.64, also 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