DTN Closing Grain Comments

Soybeans, Wheat Show Modest Gains in Quiet Trading

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

General Comments:

Corn was down 1/4 cent in the December contract and down 3/4 cent in the July. Soybeans were up 7 1/4 cents in the January contract and up 7 1/2 cents in the July. Wheat closed up 5 cents in the December Chicago contract, up 3 1/4 cents in the December Kansas City, and was up 6 1/4 cents in the December Minneapolis contract. The December U.S. dollar index is down 0.23 at 94.62. December gold is up $13.60 at $1,282.80 while December silver is up 41 cents and December copper is up $0.0395. The Dow Jones Industrial Average is up 23 at 23,562. December crude oil is up $1.56 at $57.20. December heating oil is up $0.0501 while December RBOB gasoline is up $0.0322 and December natural gas is up $0.156.

Corn:

December corn ended down a quarter-cent Monday, another narrow range day with low trading volume as corn shows no sign of wanting to leave its sideways range. Colder air is moving in from the north this week, but conditions should be favorable for harvest, staying dry across most of the Midwest. It will take a while for the eastern Midwest to recover from recent storms, but this week's drier weather should help. Dow Jones' survey of analysts expects USDA to increase its corn crop estimate from 14.28 billion to 14.32 billion bushels in Thursday's WASDE report with a higher yield estimate of 172.3 bushels an acre. If true, that will continue to make it tough for corn prices to rally much, but downside risk should also be limited at these low prices. 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. On the demand side, export activity remains slow for corn. USDA said 17.5 million bushels of corn were inspected for export last week, a bearish amount that has total inspections down 46% in 2017-18 from a year ago. USDA offered slight help with 8 a.m. CST news that 5.1 million bushels (130,000 mt) of U.S. corn were sold to unknown destinations for 2017-18. For now, the trend in corn remains solidly sideways. 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 $1.56 after a wave of arrests in Saudi Arabia over the weekend consolidated power around Crown Prince Mohammad Bin Salman.

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Soybeans:

January soybeans closed up 7 1/4 cents Monday, taking back part of Friday's 12 1/2 cent loss with help from commercial buying in both, soybean meal and oil. Monday's trading volume was light and trading may be cautious this week ahead of Thursday's WASDE report. Dow Jones' survey of analysts expects USDA to slightly reduce its estimate of soybean production, from 4.43 billion to 4.40 billion bushels. There may be wishful thinking involved and keep in mind that possible soybean losses from recent storms in the eastern Midwest would not yet be included in Thursday's WASDE report. Down south, central Brazil received some beneficial rain over the weekend and a broad coverage of moderate to heavy amounts are expected to help crops this week. Monday morning, USDA said 91.5 million bushels of soybeans were inspected for export last week, a bearish amount that has total inspections down 9% in 2017-18 from a year ago. Even so, the trend remains up in January soybeans while traders continue to keep an eye on Brazil's weather. Friday's CFTC data showed noncommercials still modestly bullish in soybeans with 67,872 net longs as of Oct. 31. 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. Fifty-one delivery intentions were reported for November soybeans early Monday.

Wheat:

December Chicago wheat closed up a nickel Monday, boosted by more commercial buying in response to last week's new low. Friday's CFTC data showed commercials increased net longs in Chicago wheat to 70,200 contracts while noncommercial traders took the bait of Halloween's new low and increased net shorts from 32,903 to 71,243. Even commercials in K.C. wheat turned net long for the first time in 2017, taking on 5,851 contracts. Aside from these occasional noncommercial missteps, the fundamental outlook for wheat prices remains bearish and Thursday's WASDE report will offer another reminder of that. The other bearish part of abundant world wheat supplies is that U.S. wheat exports remain constrained in 2017-18. USDA said earlier Monday that 10.4 million bushels of wheat were inspected for export last week, putting total inspections down 6% in 2017-18 from a year ago. So far, wheat exports are no threat to USDA's U.S. ending wheat stocks estimate of 960 million bushels and, aside from sporadic bouts of short-covering, winter wheat prices remain under bearish pressure. DTN's National SRW index closed at $3.91 Friday, priced 35 cents below the December contract and still holding above its August low. DTN's National HRW index closed at $3.66, 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