DTN Before The Bell Grain Comments

Monday the 13th Sees Milder Temperatures, Lower Prices

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

Morning CME Globex Update:

At 8 a.m. CST, USDA announced 135,000 metric tons of U.S. soybean meal was sold to the Philippines for 2017-18. Earlier, corn, soybeans, and all three wheats were starting the week lower, staying under pressure while corn and wheat supplies remain plentiful. December Minneapolis wheat is down 7 cents, falling back from last week's brief attempt at a two-month high.

Other Markets:

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

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Corn:

December corn was down 1 1/4 cents early Monday after a weekend of milder temperatures and light rains fell across the central and eastern Midwest. This week's harvest weather continues to be favorable for the western Corn Belt while light rain amounts are expected to return to the eastern Corn Belt later this week. The corn market is still getting used to USDA's latest estimate of 2.49 billion bushels of ending corn stocks for the U.S. in 2017-18 and noncommercial traders have been net short since early September. Commercials have become the sole source of support for corn prices, which is a good sign of corn's value at these cheaper prices. However without a bullish argument, it is difficult for corn to trade significantly higher. Technically, the trend in December corn is down, but prices are so cheap that downside potential is likely limited. DTN's National Corn Index closed at $3.04 Friday, priced 40 cents below the December contract and is still defiantly holding above its August low. In outside markets, December gold is up $3.00 and December crude oil is up 10 cents a barrel. CFTC's Commitments of Traders report will be released later on Monday afternoon as will USDA's next report of harvest progress.

Soybeans:

At 8 a.m. CST, USDA announced 135,000 metric tons of U.S. soybean meal was sold to the Philippines for 2017-18. January soybeans were down 3 1/4 cents early Monday, starting the week on a lower note after central Brazil received beneficial showers over the past week. This week's forecast expects more rain across central Brazil, which should be bearish for prices, if true. However, FOB soybean prices in Brazil translate to $10.71 early Monday, near their highest in three months and are 33 cents above prices at the U.S. Gulf -- a bullish contradiction to this week's forecast. Monday afternoon's report from USDA should show the U.S. soybean harvest getting close to the finish line. Wet conditions in the eastern Corn Belt are the final hurdle and light amounts are expected to return later this week. Technically, the trend remains up in January soybeans, but it is important for prices to stay above the five-week low at $9.69 1/2. DTN's National Soybean Index closed at $9.07 Friday, priced 80 cents below the January contract and down from its highest price in over three months. 137 delivery intentions were reported for November soybeans early Monday and the November contract expires early Tuesday.

Wheat:

December Chicago wheat was down 5 1/4 cents early, quickly erasing most of last week's gain with a pleasant week of mild November weather expected across the southern Plains, favorable for any planting that needs to be done. USDA said 91% of winter wheat was planted last Monday so Monday afternoon's report should be closer to 100%, but we won't know how many acres USDA has in mind until their Winter Wheat Seedings report on Jan. 12. Of course, none of that has any meaning to traders who seem content in their short positions and the knowledge that wheat supplies are likely to remain plentiful in the U.S. and around the world all winter. Technically, the trend remains mostly sideways, at a cheap level and under bearish pressure. DTN's National SRW index closed at $3.97 Friday, priced 34 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