DTN Before The Bell Grain Comments

Soybeans Start With Modest Bounce

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 5.2 million bushels (133,096 mt) of U.S. corn was sold to unknown destinations for 2017-18. January soybeans were starting a little higher after Monday's new four-week low, sandwiched between slightly lower prices for corn and wheat.

Other Markets:

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

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Corn:

At 8 a.m. CST, USDA announced 5.2 million bushels (133,096 mt) of U.S. corn was sold to unknown destinations for 2017-18. Before the announcement, December corn was down 3/4 cent, quietly refusing to move away from its lowest prices of 2017. Late Monday, USDA said 83% of the corn crop was harvested, making progress, but still behind the five-year average of 91% harvested for this time of year. Delays in the eastern Corn Belt seem to be he most troublesome with more rain expected for the region later this week while the western and central Corn Belt enjoy drier weather. CFTC's Commitments of Traders report was released Monday afternoon due to Veteran's Day 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. The bottom line for prices is that we are heading into winter with plentiful supplies and an export pace that is starting painfully slow. December corn prices remain under bearish pressure, but at these low levels, downside potential should be limited. 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, Tuesday showed plenty of red with the December U.S. dollar index, gold, and crude oil all trading lower.

Soybeans:

January soybeans were up 2 3/4 cents early, a slight bounce after Monday's new four-week low, but still showing warning signs of bearish change. USDA said late Monday that 93% of U.S. soybeans were harvested, close to their five-year average pace. If USDA's crop estimate of 4.425 billion bushels is correct, roughly 300 million bushels are still in the field. Monday's CFTC report showed noncommercial traders increased net longs from 67,872 to 70,814 as of Nov. 7, just before prices made a bearish reversal on Nov. 9. That did not set traders up well for the selling that has taken place since then and adds bearish pressure to the current situation. The real key to where prices go from here depends on Brazil's next crop and so far, this week's forecast is bearish, expecting more rain across central Brazil. January soybeans has been in an uptrend, but a close below $9.69 1/2, if it happened would turn the trend down at a time when Brazil has been getting more beneficial rains. 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. On the final day of trading, 150 delivery intentions were reported for November soybeans early Tuesday.

Wheat:

December Chicago wheat was down 1/4 cent early, staying within a narrow sideways range in November -- a trading pattern that is likely to become very familiar this winter. Late Monday, USDA said 95% of winter wheat was planted, 84% was emerged, and 54% of the crop was rated good-to-excellent. As mentioned often, we still don't know how big of a planting USDA is expecting so the above numbers don't have much meaning yet. Given the apparent success of this year's corn crop in dry weather conditions (see Tuesday's DTN article, "Is This the Year of Super Corn?"), more wheat areas may be willing to diversify into corn in 2018. 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. That commercial support is helping prices trade sideways while plentiful supplies keep prices under bearish pressure. DTN's National SRW index closed at $3.91 Monday, 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