DTN Before The Bell Grain Comments

Todd Hultman
By  Todd Hultman , DTN Grains Analyst
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(DTN photo by Greg Horstmeier)

Morning CME Globex Update:

If the Iowa Hawkeyes can beat the Ohio State Buckeyes, then why can't corn and wheat trade higher on Monday? At 8 a.m. CDT, USDA announced 5.1 million bushels (130,000 mt) of U.S. corn were sold to unknown destinations for 2017-18.

Other Markets:

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

Corn:

At 8 a.m. CDT, USDA announced 5.1 million bushels (130,000 mt) of U.S. corn were sold to unknown destinations for 2017-18. Earlier, December corn was up 1 1/2 cents, staying true to its sideways range of the past two months while Monday's weather and the seven-day forecast look more favorable for harvest progress. Even the eastern Midwest is expected to be drier this week after several weeks of wet weather. Friday's CFTC data showed noncommercial traders turned more bearish in corn as of Oct. 31, increasing net shorts from 70,556 to 91,759. Commercials increased net longs to 81,210, finding value in corn's cheaper prices. Fundamentally, there is nothing happening to expect higher corn prices and Thursday's WASDE report could show a higher U.S. crop estimate. Seasonally however, December corn has done well to hold sideways at a time when all the attention has been on plentiful supplies and this is the time of year when seasonal lows are typically made. DTN's National Corn Index closed at $3.07 Friday, priced 41 cents below the December contract and is still holding above its August low. In outside markets, the December crude oil is up 0.30 after several Saudi Princes and former officials were arrested over the weekend in an attempt to consolidate power around Prince Mohammad Bin Salman.

Soybeans:

January soybeans were up 2 cents early Monday with a narrow overnight range. Here in the U.S. drier weather is expected across the Midwest, north of the Ohio River and giving eastern states a better chance at harvest. In central Brazil, a broad coverage of rain is expected this week while southern Brazil is in for lighter amounts. Friday's CFTC data showed noncommercials still modestly bullish in soybeans with 67,872 net longs as of Oct. 31. It is a bit odd for noncommercials to be net long at harvest time, but prices have been trending gradually higher. The concern in this situation is noncommercial interest may fade as prices have not hit a new high since Oct. 13 and the early export pace is down from a year ago. The big key for where prices go from here depends on the size of Brazil's next crop and it is still too early to say after this year's dry start in central Brazil. In the meantime, the trend remains up for January soybeans. DTN's National Soybean Index closed at $9.03 Friday, priced 84 cents below the January contract and down from its highest price in over two months. 51 delivery intentions were reported for November soybeans early Monday.

Wheat:

December Chicago wheat was up 3 1/2 cents Monday, helped by an early show of commercial buying as prices get more separation from last week's new low. Thursday's WASDE report from USDA is likely to remind us that U.S. and world wheat supplies are abundant. With the U.S. struggling to stir up any export business, the only buyers currently interested in this market are commercial bargain-hunters and that is not bullish for prices. Friday's CFTC data showed noncommercial traders responded to last week's new low in Chicago wheat, increasing net shorts from 32,903 to 71,243 as of Oct. 31. Commercials increased net longs to 70,200, finding attractive value at Halloween's lower prices. Also, commercials in K.C. wheat turned net long for the first time in 2017 with 5,851 contracts -- a sign that K.C. wheat prices are also starting to find support. In spite of last week's new low, the more likely path ahead is sideways to occasionally lower this winter. DTN's National SRW index closed at $3.91 Friday, priced 35 cents below the December contract and 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