DTN Closing Grain Comments

Soybean Meal Climbs to New One-Month High

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

General Comments:

Corn was up 1/4 cent in the December contract and up 1 cent in the July. Soybeans were up 8 1/4 cents in the January contract and up 8 1/4 cents in the July. Wheat closed down 2 cents in the December Chicago contract, up 3/4 cent in the December Kansas City, and up 3/4 cent in the December Minneapolis contract. The December U.S. dollar index is down 0.62 at 93.26. December gold is up $10.60 at $1,292.30 while December silver is up 14 cents and December copper is up $0.0080. The Dow Jones Industrial Average is down 54 at 23,536. January crude oil is up $1.14 at $57.97. January heating oil is down $0.0001 while January RBOB gasoline is down $0.0048 and January natural gas is down $0.048.

Corn:

December corn stayed true to the tradition of pre-holiday trading and ended up a quarter-cent Wednesday on light volume. To be fair, there was not much corn-related news to trade on, but the U.S. Energy Department (DOE) did announce a new record high of 1.074 million barrels a day of ethanol production from last week -- one important source of support for prices. DOE also said ethanol inventory increased from 21.5 million to 21.9 million barrels, starting to turn higher as it typically does this time of year. The final 1.5 billion bushels of corn that still needs to be harvested will get good chances as the forecast looks mostly dry for the Corn Belt the next ten days. Fundamentally, the outlook for corn remains bearish with U.S. supplies plentiful, but below the surface, cash corn prices are showing slow improvement and bearish noncommercials are vulnerable to short-covering, holding their most net shorts in over four years. For now, the trend is down in December corn, but appears to be leveling. DTN's National Corn Index closed at $3.09 Tuesday, priced 36 cents below the December contract and near its highest prices in two months.

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Soybeans:

January soybeans closed up 8 1/4 cents at $9.97 1/4 Wednesday, a bigger gain than would normally be expected on the day before Thanksgiving. Wednesday's rally appears related to the recent stretch of dry forecasts for Argentina, presenting a new concern for crops and taking the spotlight away from central Brazil where recent rains have helped improve conditions somewhat. Adding further concern about South America's next crops, FOB soybean prices at Brazil's ports hit $10.75 a bushel Wednesday, the highest in over three months and 31 cents above prices at the U.S. Gulf. It is still early in the new crop season and a lot can change, but the trend in December soybean meal turned bullish Wednesday with a close of $324.40, the highest in over a month. There is a lot riding on how the next wave of South American crops fare and so far, January soybeans are holding in a sideways trend, just shy of $10.00. DTN's National Soybean Index closed at $9.14 Tuesday, priced 75 cents below the January contract and near its highest prices in three months.

Wheat

December Chicago wheat closed down 2 cents at $4.22 3/4 on light volume as it is no stretch to guess most traders left early for the holiday. The December contract continues to trade within a narrow, 15-cent sideways range, which has become suspiciously predictable. The bigger point is not just that this a holiday week, but November is also that time of year when the Northern Hemisphere starts to go dark and wheat prices typically go quiet. A surprise is always possible of course, so we at DTN will keep watch. But if your post-Thanksgiving nap extends to spring, you probably won't miss much as far as wheat prices are concerned. That is especially applicable this year as global ending wheat supplies are estimated at record highs after five consecutive years of crop-friendly weather. On the less-bearish side, there is a price for every situation and winter wheat prices are likely to remain supported in sideways trading at their lowest spot levels in 11 years. DTN's National SRW index closed at $3.93 Tuesday, priced 32 cents below the December contract and still holding above its August low. DTN's National HRW index closed at $3.67, still holding stubbornly above its August low. U.S. grain futures will resume trading at 8:30 a.m. CST on Friday for a short session that ends early Friday, at 12:05 p.m. CST for most.

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

Follow Todd Hultman on Twitter @ToddHultman1

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Todd Hultman