Morning CME Globex Update:
Friday morning met December corn with low temperatures and slightly lower prices, but at least conditions will be mostly dry for harvest. Light commercial buying returned to soybeans and soybean meal, while wheat contracts started slightly lower.
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December corn was down a half-cent early Friday, waking up to new low temperatures and prices after USDA raised its yield estimate to a record high 175.4 bushels an acre on Thursday. Much of the northern Midwest will not see temperatures above freezing on Wednesday, but conditions are mostly dry for harvest. The new U.S. ending corn stocks estimate of 3.49 billion bushels adds another bearish layer on top of an already bearish situation for corn and delays the start of corn's demand season. The other factor weighing on corn prices in early 2017-18 is slow exports as U.S. corn shipments are down 42% from a year ago with prices still favoring Brazil. As bearish as Thursday's news was for corn, it is helpful that noncommercials were already net short and commercials had been finding corn's cheap prices attractive for over a month. The trend in December corn is down, but the downside potential is questionable at these low prices. DTN's National Corn Index closed at $3.02 Thursday, priced 40 cents below the December contract and is still defiantly holding above its August low. Early Friday, outside markets are mixed with the December U.S. dollar index up 0.03.
January soybeans were up 2 1/4 cents early, a small early bounce after Thursday's bearish reversal. Thursday's selling in soybeans seemed more related to corn's news as USDA's U.S. ending stocks estimate for soybeans was trimmed from 430 to 425 million bushels -- not much of a change. It is also fair to say that Thursday's selling also revealed nervousness about the future of soybean prices ahead as Brazil's next crop is off to a shaky start. The forecast for central Brazil continues to expect more rain in the week ahead, but so far, actual amounts have been limited. This week's forecast for Argentina turned drier and may be related to a brief move toward La Nina conditions. Brazil's FOB soybean prices fell back from their three-month highs on Thursday, but are still 25 cents above prices at the U.S. Gulf. Technically, the trend remains up in January soybeans, but Thursday's reversal fell short of the October high and is potentially bearish. DTN's National Soybean Index closed at $9.04 Thursday, priced 81 cents below the January contract and down from its highest price in over three months. 130 delivery intentions were reported for November soybeans early Friday.
December Chicago wheat was down 3/4 cent early, taking back part of Thursday's gain and maintaining a sideways course in spite of Halloween's attempt at a new low. USDA's lower 935 million bushel estimate of U.S. ending wheat stocks was a rare improvement on report day, but also comes with questions as it was related to a 25 million bushel increase in wheat's export estimate. So far in 2017-18, U.S. wheat shipments are down 6% from a year ago and aren't expected to do any better the rest of the season while so much wheat is available around the world. USDA's balance sheet aside, there is no argument that winter wheat supplies are plentiful and futures spreads indicate a bearish commercial outlook with strong carries in both, Chicago and K.C. contracts. Technically, the trends in Chicago and K.C. wheat remain roughly sideways, under bearish pressure. DTN's National SRW index closed at $3.94 Thursday, priced 35 cents below the December contract and holding above its August low.
Todd Hultman can be reached at firstname.lastname@example.org
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