DTN Closing Grain Comments

Grains Regroup, End Slightly Higher

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

General Comments:

Corn closed up 2 cents in the December contract and up 1 1/2 cents in the July. Soybeans closed up 2 cents in the January and up 2 cents in the July. Wheat closed up 2 1/2 cents in the December Chicago, up 4 1/4 cents in the December Kansas City, and down 1/2 cent in the December Minneapolis. The December U.S. dollar index is down 0.04 at 94.31. December gold is down $11.90 at $1,275.70 while December silver is down $0.06 and December copper is down 0.0100. The Dow Jones Industrial Average is down 34 at 23,428. December crude oil is down $0.32 at $56.85. December heating oil is down $0.053, December RBOB gasoline is down $0.0052, and December natural gas is up $0.007.

For the week:

December corn closed down 4 3/4 cents and July closed down 5 1/4 cents. January soybeans were up 1/4 cent while the July was up 1 cent. December Chicago wheat was up 5 3/4 cents, December Kansas City wheat was up 6 1/2 cents, and December Minneapolis wheat was up 22 3/4 cents.

Corn:

December corn closed up 2 cents Friday at $3.43 1/2, but was down 4 3/4 cents on the week with the market still reeling from USDA's record high 175.4 bushel an acre yield estimate, released Thursday. As shocking as USDA's record yield estimate was, coming in a year when USDA's good-to-excellent corn crop ratings were at their lowest since 2013, Friday's trading showed no sign of adding to Thursday's panicked selling and even saw a light response of commercial buying. CFTC next Commitments of Traders report will be released Monday afternoon, due to the observance Veterans Day. USDA's new ending corn stocks estimate of 2.49 billion bushels for the U.S. is clearly bearish and will discourage buyers, but how far corn prices drop will depend on commercial assessments of value and, so far, they have shown a pattern of growing interest since late-September. Technically, the trend in December corn is down, but it is still possible that downside potential is limited. 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.

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Soybeans:

January soybeans closed up 2 cents at $9.87 and actually gained a tick on the week, helped by Friday's rebound of buying in soybean meal. Even though soybean prices had a bearish reaction after Thursday's WASDE report, USDA's November estimates were similar to October with domestic ending stocks slightly reduced from 430 million to 425 million bushels. With the U.S. soybean harvest now over 90% finished, increased attention is on Brazil where Dow Jones quoted the private consultant Ag Rural as saying that 57% of Brazil's soybean crop has been planted, close to the five-year average pace, but slower than a year ago. As has been true for a while, the seven-day forecast is expecting more rain for central Brazil, but so far, actual amounts have been light. Brazil's FOB soybean price fell back from its three-month high, to $10.58 Friday, but is still 24 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 could be an early sign of bearish change. 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. One hundred thirty delivery intentions were reported for November soybeans early Friday.

Wheat

December Chicago wheat closed up 2 1/2 cents Friday at $4.31 1/2 and was up 5 3/4 cents on the week, generating some unexpected short-covering after USDA lowered its estimate of U.S. ending stocks from 960 million to 935 million bushels on Thursday. USDA's 25 million bushel increase in the export estimate is suspicious as U.S. wheat shipments are running 6% lower than a year ago. It is also difficult to imagine wheat exports getting much better while so much wheat is available around the world. If anyone still pays attention to USDA's Crop Progress reports, USDA estimated 91% of winter wheat has been planted and the good-to-excellent rating of 55% is 3 percentage points lower than a year ago. However, we won't know what those percentages are supposed to mean until USDA releases its estimate of winter wheat acreage on Jan. 12. What we reasonably can assume is that the U.S. and the world have plenty of winter wheat available and prices are likely to keep trading roughly sideways through the winter with occasional bouts of noncommercial short-covering. DTN's National SRW index closed at $3.94 Thursday, priced 35 cents below the December contract and holding above its August low. DTN's National HRW index closed at $3.70, also above its August low.

With thanks to veterans, for your service.

Todd Hultman can be reached at todd.hultman@dtn.com

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman