DTN Before The Bell Grain Comments

Lower Start to Thanksgiving Week

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 below Friday's closes with relatively warm November temperatures and drier weather expected to help push along this year's row crop harvest.

Other Markets:

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

Corn:

December corn was down a quarter-cent early Monday, a hint of early caution after Friday's unexpected 6 1/2 cent gain. This week's weather is expected to be favorable for the remaining laps of corn harvest with a mix of relatively warm temperatures and mostly dry weather expected across the Corn Belt. Fundamentally, there is nothing bullish to say on corn's behalf as U.S. supplies are heavy and exports are slow. However, last week's new low prices attracted more selling from noncommercials, which may have put them in a bind. Friday's CFTC data showed noncommercials turned more bearish in corn as of Nov. 14 (after USDA's higher crop estimate) with net shorts jumping from 87,000 to 125,113 contracts, the most since October 2013. 43% of noncommercial positions were on the long side, the most bearish sentiment corn has seen since the start of 2014. Commercials increased net longs in corn from 74,855 to 121,614, a strong show of support for corn's value at these new low prices. Technically, the trend remains down in December corn, but last week's commercial response suggests that support for prices is near. DTN's National Corn Index closed at $3.06 Friday, priced 37 cents below the December contract and up from its lowest price in two months. In outside markets, the December U.S. dollar index is up 0.15, holding roughly steady while gold and crude oil are both starting lower.

Soybeans:

January soybeans were down 3 1/4 cents early, maintaining a nervous sideways range while traders keep an eye on South America's next crops. Monday's satellite map shows possible rain activity across central Brazil with more expected in this week's forecast. Argentina on the other hand, has another dry forecast this week, which looks to be related to the recent emergence of La Nina readings. While Friday's CFTC data showed corn traders actively selling at corn's new lows, noncommercials in soybeans were calmer, still lightly bullish with 51,887 net longs as of Nov. 14. Here in the U.S., soybeans will have better harvest opportunities this week, thanks to relatively warm and dry weather. Monday's afternoon's Crop Progress report may show harvest down to the final 180 million bushels or so. The trend in January soybeans is currently sideways with plenty of potential to head either direction, depending on how South America's crops do in early 2018. For now, trade appears balanced around $9.90. DTN's National Soybean Index closed at $9.13 Friday, priced 77 cents below the January contract and back up from the lowest price in over a month.

Wheat:

December Chicago wheat was down 3 3/4 cents early, maintaining its sideways range in November even though every fundamental discussion ends with a bearish conclusion, based on heavy supplies and slow U.S. exports. Friday's CFTC data showed noncommercials still bearish in Chicago wheat, but carrying a lighter position of 66,771 net shorts as of Nov. 14. Commercials trimmed back net longs from 81,604 to 69,612, but still stand as wheat's sole source of support. This week's forecast remains dry across the southern Plains with warm November temperatures, a pattern that could be related to La Nina. This will be important to monitor over the winter, but traders are not likely to show any response until next spring, if the dryness persists. For now, the trend in winter wheat is roughly sideways with prices under bearish pressure. DTN's National SRW index closed at $3.94 Friday, priced 33 cents below the December contract and holding well 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