DTN Closing Grain Comments

Are Growers Harvesting Super-Corn In 2017?

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

General Comments:

Corn was down 6 3/4 cents in the December contract and down 6 cents in the July. Soybeans were down 13 1/2 cents in the January contract and down 12 3/4 cents in the July. Wheat closed up 2 1/4 cents in the December Chicago contract, up 1 1/2 cents in the December Kansas City, and was up 4 1/2 cents in the December Minneapolis contract.

The December U.S. dollar index is down 0.38 at 94.38. December gold is up $3.20 at $1,286.90 while December silver is down 16 cents and December copper is down $0.0105. The Dow Jones Industrial Average is down 128 at 23,435. December crude oil is up $0.40 at $57.21. December heating oil is up $0.0265 while December RBOB gasoline is up $0.0030 and December natural gas is up $0.023.

Corn:

December corn closed down 6 3/4 cents Thursday at a new contract low of $3.41 1/2 after USDA surprised markets with a higher-than-expected corn crop estimate of 14.578 billion bushels, based on a new record high national yield of 175.4 bushels an acre. And the record high yield supposedly happened in a year when USDA's good-to-excellent crop rating for corn was the lowest since 2013. USDA's estimate of U.S. ending corn stocks increased from 2.340 to 2.487 billion bushels or 17% of annual use, the most in twelve years. Given this year's weather challenges, no one was expected a record corn yield and this may take a while for corn prices to digest. USDA's estimate of world ending corn stocks increased from 200.96 to 203.86, largely due to the increase in U.S. production, but also included a 2 mmt reduction in Ukraine's production estimate. Earlier Thursday, USDA said last week's export sales and shipments of corn totaled 93.1 and 19.3 million bushels respectively, a bearish combination for the week in spite of a sales boost from Mexico. Total corn shipments are down 42% in 2017-18 from a year ago. Technically, Thursday's new low in December corn is a new bearish change which may entice more noncommercial selling. DTN's National Corn Index closed at $3.08 Wednesday, priced 40 cents below the December contract and is still holding above its August low. In outside markets, the December U.S. dollar index is down 0.38 after the European Union raised its estimate of GDP growth from 1.7% to 2.2% for 2017.

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Soybeans:

January soybeans closed down 13 1/2 cents Thursday, succumbing to bearish influence from corn even though USDA's new estimates were mostly neutral for soybeans. USDA reduced its estimate of U.S. ending soybean stocks from 430 to 425 million bushels for 2017-18, based on a slightly lower crop estimate of 4.425 billion bushels and the same yield of 49.5 bushels an acre. USDA increased its estimate of world ending soybean stocks from 96.05 to 97.90 mmt, largely due to a one mmt increase in Brazil's new crop estimate and a revision from the previous season. None of Thursday's changes were significant for soybean prices and it is safe to say that South America's crop estimates will be changed many times before we get to the end of that new season. Early Thursday, USDA said last week's export sales and shipments of soybeans totaled 42.6 and 92.6 million bushels respectively, a bearish combination for the week that has total shipments down 8% in 2017-18 from a year ago. Technically, Thursday's lower close in January soybeans is an outside reversal which fell just short of October's high. That does not bode well for soybean prices and could be an early warning of a bearish change in soybean prices. DTN's National Soybean Index closed at $9.16 Wednesday, priced 82 cents below the January contract and down from its highest price in over two months. 133 delivery intentions were reported for November soybeans early Thursday.

Wheat

December Chicago wheat finished up 2 1/4 cents, ignoring Thursday's bearish reaction from corn and soybeans with help from a slight reduction in USDA's domestic ending stocks estimate. USDA said U.S. wheat stocks will total 935 million bushels at the end of 2017-18, down from last month's 960 million bushels and thanks to a 25-million bushel increase in USDA's export estimate. USDA slightly reduced its estimate of world ending wheat stocks from 268.13 to 267.53 mmt, a minor change that still shows record high ending stocks for 2017-18. Earlier Thursday, USDA said last week's export sales and shipments of wheat totaled 28.7 and 10.9 million bushels respectively, a marketing year high for sales, but still a bearish combination for the week. Total wheat shipments in 2017-18 are down 6% from a year ago. Technically, the trend remains roughly sideways for winter wheat with big supplies of corn and wheat keeping bearish pressure on prices. DTN's National SRW index closed at $3.92 Wednesday, priced 35 cents below the December contract and still holding above its August low. DTN's National HRW index closed at $3.68, also holding stubbornly 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