DTN Closing Grain Comments

New Lows in Corn Follow Higher Crop Estimate

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

General Comments:

Corn was down 4 3/4 cents in the December contract and down 4 1/2 cents in the July. Soybeans were down 6 1/2 cents in the January contract and down 6 1/2 cents in the July. Wheat closed up 3 3/4 cents in the December Chicago contract, up 1/2 cent in the December Kansas City, and down 4 1/4 cents in the December Minneapolis contract. The December U.S. dollar index is down 0.71 at 93.68. December gold is up $4.00 at $1,282.90 while December silver is up 1 cent and December copper is down $0.0565. The Dow Jones Industrial Average is down 53 at 23,386. December crude oil is down $1.23 at $55.53. December heating oil is down $0.0323 while December RBOB gasoline is down $0.0374 and December natural gas is down $0.071.

Corn:

December corn dropped 4 3/4 cents to a new contract low of $3.37 1/2 Tuesday as the market is still reeling from USDA's higher corn crop estimate of 14.58 billion bushels, released last Thursday. CFTC's Commitments of Traders report was released Monday afternoon and showed noncommercials still bearish in corn with 87,000 net shorts as of Nov. 7. Commercials reduced net longs from 81,210 to 74,855, but still found attractive value in corn's lower prices. Tuesday's new lows were likely fed by more noncommercial selling, encouraged by USDA's estimate of increased U.S. supplies, which are being protected by a slow export pace early in 2017-18. USDA did say Tuesday that 5.2 million bushels (133,096 mt) of U.S. corn were sold to unknown destinations for 2017-18, but much more is needed. Technically, the trend in December corn remains down while commercials remain the sole source of support for prices. DTN's National Corn Index closed at $3.03 Monday, priced 39 cents below the December contract and is still defiantly holding above its August low. In outside markets, the December U.S. dollar index is down 0.71 after RTTNews.com reported Germany's GDP increased 2.8% in the third quarter from a year ago, more than expected. December crude oil is down $1.23 after the International Energy Agency trimmed its estimate of world oil demand.

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Soybeans:

January soybeans were down 6 1/2 cents at $9.67 3/4, the lowest close in five weeks as prices continue to be pressured by rain in Brazil and new lows in corn. Central Brazil has received beneficial rains the past seven days, a good time for giving crops a boost and the forecast for the week ahead expects more on the way. Brazil's improved conditions caught noncommercials off guard as Monday's CFTC report showed traders increased net longs from 67,872 to 70,814 as of Nov. 7, just before prices posted a bearish reversal on Nov. 9. FOB soybean prices at Brazil's ports are down from recent highs, at $10.59, but are still 34 cents above prices at the U.S. Gulf. The U.S. price advantage is the one bullish factor going for U.S. soybean prices now, but so far the U.S. export pace is down from a year ago. Technically, Tuesday's lower closes turned the trends down in both January soybeans and December soybean meal -- fresh bearish changes in Brazil's equivalent of mid-May. DTN's National Soybean Index closed at $8.95 Monday, priced 79 cents below the January contract and down from its highest price in over three months. November soybeans ended down 4 1/2 cents at $4.59 on their final day of trading.

Wheat:

December Chicago wheat closed up 3 3/4 cents at $4.28, a modest show of commercial buying with outside help from Tuesday's lower U.S. dollar index. Late Monday, USDA said 95% of winter wheat was planted, 84% was emerged, and 54% was rated good-to-excellent, down from 59% a year ago. The more important question is how much winter wheat is being planted this year and we won't have USDA's estimate of that until Jan. 12. In the meantime, it will be difficult for wheat prices to sustain any rallies while U.S. and world supplies are so plentiful this winter. Monday's CFTC report showed noncommercials still bearish in Chicago wheat with 79,046 net shorts as of Nov. 7, the most since May 2017. Commercials increased net longs from 70,200 to 81,604, continuing to show active support for prices in the low $4s. Technically, the trend in Chicago wheat has been mostly sideways with an occasional new low in the mix. DTN's National SRW index closed at $3.91 Monday, priced 34 cents below the December contract and still holding above its August low. DTN's National HRW index closed at $3.70, also holding stubbornly above its August low.

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

Follow Todd Hultman on Twitter @ToddHultman1

(CZ)

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Todd Hultman