DTN Closing Grain Comments

Commodities Enjoy Their Own Black Friday

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

General Comments:

Corn closed up 6 1/2 cents in the December contract and up 6 cents in the July. Soybeans closed up 18 1/2 cents in the January and up 18 cents in the July. Wheat closed up 5 3/4 cents in the December Chicago, up 5 cents in the December Kansas City, and up 4 3/4 cents in the December Minneapolis. The December U.S. dollar index is down 0.26 at 93.59. December gold is up $15.50 at $1,293.70 while December silver is up $0.23 and December copper is up 0.0205. The Dow Jones Industrial Average is down 91 at 23,367. January crude oil is up $1.27 at $56.62. January heating oil is up $0.434, January RBOB gasoline is up $0.0297, and January natural gas is up $0.043.

For the week:

December corn closed down 1/2 cent and July closed down 1 3/4 cents. January soybeans were up 3 1/2 cents while the July was up 4 cents. December Chicago wheat was down 4 1/4 cents, December Kansas City wheat was down 11 1/4 cents, and December Minneapolis wheat was down 12 1/2 cents.

Corn:

December corn closed up 6 1/2 cents Friday, dropping just a half-cent on the week, still wrestling with the bearishness of USDA's higher 14.58 billion bushel corn crop estimate. However, there is a price for every situation and Friday's unexpected rally was helped by commercial buying, giving hope that corn prices may finally be nearing the end of this year's bearish limit. Of interest later Friday afternoon, the CFTC will show how traders and commercials reacted to December corn's new lows as of Tuesday and there is a chance traders may have over-reacted on the bearish side. Technically and fundamentally, the outlook for corn prices remains bearish as the trend is down, supplies are plentiful, and exports are slow. From a value perspective, commercial interest remains an important source of support for corn prices and may be ready to stem the bearish tide. DTN's National Corn Index closed at $2.98 Thursday, priced 38 cents below the December contract and near its lowest price since Aug. 30. In outside markets, the December U.S. dollar index is down 0.26 after Europe showed improved signs of growth this week. December gold is up $15.50 and January crude oil is up $1.27 -- two examples of outside commodities lending bullish influence to grains on Friday.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

Soybeans:

January soybeans jumped up 18 1/2 cents Friday, salvaging a 3 1/2 cent gain on the week. Technically, this has been an interesting week for January soybeans as Tuesday's new five-week low went no farther and was then reversed by Friday's double-digit gain. It is difficult to pinpoint a reason for soybeans' bullish turn other than to say there is still plenty of uncertainty over how Brazil's next crop will do and so far this week, rain totals have not yet matched the more bearish looking forecasts. The latest forecast for the week ahead expects a broad coverage of rain across Brazil, but actual totals have been lower so far. A drier forecast for Argentina may be related to the relatively new La Nina pattern and deserve monitoring. Fundamentally, USDA expects Brazil to end the current season with 195 million bushels of excess soybeans, meaning that Brazil is going to have to come through with a 4 billion bushel crop to keep from disrupting the flow of supplies in 2018. With the big questions riding on South American weather, the trend in January soybeans has changed to sideways. DTN's National Soybean Index closed at $8.95 Thursday, priced 77 cents below the January contract and near the lowest price in over a month.

Wheat

December Chicago wheat closed up 5 3/4 cents, cutting its loss for the week to 4 1/4 cents with help from Friday's commercial buying. There was no specific bullish news for wheat prices on Friday that wasn't known on Thursday, but Friday's gain does suggest commercials are serious about finding good value in Chicago wheat prices in the low $4s. That alone should make noncommercial traders more uncomfortable with the 79,046 net shorts they were holding in last Friday's Commitments of Traders report, but they have proven to be slow learners before. Here in the U.S., there are increased patches of drought conditions in the Southern Plains and the western edge has not gotten much rain the past 30 days. However, that slight bullish potential is no match for all the wheat supplies that are available this season and traders aren't likely to be concerned about U.S. weather until next spring. Technically, winter wheat continues to trade roughly sideways, having reached a cheap price level that is attractive to commercials. DTN's National SRW index closed at $3.88 Thursday, priced 33 cents below the December contract and holding above its August low. DTN's National HRW index closed at $3.63, also above its August low.

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

Follow Todd Hultman on Twitter @ToddHultman1

(CZ)

P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]

Todd Hultman