DTN Before The Bell Grain Comments

Friday Morning's Grains Nudge Higher

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

Morning CME Globex Update:

Corn, soybeans, and all three wheats were starting a little higher, trying to earn back some of the week's losses with early help from higher outside commodity prices.

Other Markets:

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

Corn:

December corn was up 1 1/4 cents Friday, helped by an early response of light commercial buying to its lowest prices this year. Grains are also getting modest support from Friday morning's broadly higher commodity prices. Tuesday's weather map is mostly dry across the Corn Belt with chances of light rain developing later in the day and spreading into the eastern Corn Belt on Saturday. After Saturday however, drier weather is expected to return which will be helpful for the remaining corn harvest. Brazil continues to win export business early in 2017-18 and the next corn crop in southern Brazil is off to a good start as far as moisture is concerned. The result is that here in the U.S., we have plenty of corn for ethanol and feed demand while export shipments are down 41% in 2017-18 from a year ago. Needless to say, the trend in corn remains down, but prices should be near support with commercials already net long. 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 0.11 after Europe showed improved signs of growth this week.

Soybeans:

January soybeans were up 4 cents Friday, showing stubbornness about following through on Tuesday's new five-week low with early support from higher prices in soybean meal. The next big risk or opportunity for soybean prices is riding on the success of Brazil's next soybean crop and the uncertainty of it all is keeping soybean prices restrained. Friday's satellite map looks mostly dry for central Brazil while the one-week forecast continues to expect a broad coverage of rain for all of Brazil's crop areas. Rain over the past week has been helpful to crops, but more will be needed so it is important to see if these forecasts prove out. On the demand side, U.S. soybean exports in early 2017-18 have been lower than expected so China does not appear to be showing any concern about Brazil's next crop yet. Technically, the trend in January soybeans turned lower this week, but without follow through and without any clear guidance yet on how Brazil's crop will fare, it is more accurate to say this market is directionless. 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 was up 3 cents, boosted by an early response of commercial buying which is keeping November's prices within a narrow sideways range. Given all the winter wheat that is available in the U.S. and around the world this year, and the lack of exports that goes with the situation, a sideways range feels like a moral victory after this summer's price collapse. With spot Chicago wheat prices back down near their lowest level in eleven years, noncommercial bears are on thin ice, but may go unchallenged through the winter. Thursday's U.S. Drought Monitor showed drier conditions in the southern Plains which will be worth keeping an eye on, but will probably have no price impact until next spring. Technically, the trend in Chicago wheat remains roughly sideways, a path that will likely become familiar this winter. DTN's National SRW index closed at $3.88 Thursday, priced 33 cents below the December contract and holding well above its August low.

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

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Todd Hultman