DTN Closing Grain Comments

No Black Friday for Grains

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

General Comments:

Corn closed down 3 cents in the December contract and down 2 cents in the July. Soybeans closed down 4 cents in the January and down 3 3/4 cents in the July. Wheat closed down 6 cents in the March Chicago, down 6 1/2 cents in the March Kansas City, and down 2 3/4 cents in the March Minneapolis. The December U.S. dollar index is down 0.45 at 92.70. December gold is down $4.50 at $1,287.70 while December silver is down $0.11 and December copper is up 0.0330. The Dow Jones Industrial Average is up 32 at 23,558. January crude oil is up $0.88 at $58.90. January heating oil is up $0.140, January RBOB gasoline is up $0.0252, and January natural gas is down $0.138.

For the week:

December corn closed down 3/4 cent and July closed unchanged. January soybeans were up 2 3/4 cents while the July was up 3 cents. March Chicago wheat was down 8 3/4 cents, March Kansas City wheat was down 7 1/2 cents, and March Minneapolis wheat was down 11 1/2 cents.

Corn:

December corn closed down 3 cents Friday at $3.42 1/4 and was down 3/4 cent on the week, but was still above last week's new contract low. Friday's warmer weather was also dry across most of the Corn Belt and offered more chances for the final laps of this year's corn harvest. The latest seven-day forecast has chances for light rain in the Eastern Corn Belt, but should be dry enough for most areas to finish this year. Corn's fundamental outlook remains bearish with USDA expecting 2.49 billion bushels of ending U.S. corn stocks in 2017-18 and export sales off to a slow start. Early Friday, USDA said last week's export sales and shipments of corn totaled 42.6 million and 27.4 million bushels, respectively, a bearish combination for the week that continues to reflect increased competition from Brazil. So far in 2017-18, total corn shipments are down 37% from a year ago, not offering much help to move this fall's 14.6-billion-bushel harvest. Technically, the trend remains down in corn, but downside potential should be limited with noncommercial traders holding their largest short position in over four years. CFTC weekly Commitments of Traders report will be released Monday afternoon, due to this week's holiday. DTN's National Corn Index closed at $3.09 Wednesday, priced 36 cents below the December contract and near its highest prices in two months. In outside markets, January crude oil is up 88 cents a barrel, trading at its highest spot prices in over two years while part of the Keystone pipeline remains closed and OPEC is expected to extend production cuts.

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Soybeans:

January soybeans ended down 4 cents Friday at $9.93 1/4, but held on to a small gain of 2 3/4 cents for the week. Soybean prices continue to wrestle with changing weather reports from South America, and this week saw beneficial rains across central Brazil while Argentina was drier and also shows a dry forecast for the week ahead. It is still early in the new season and, as we saw in the U.S., dry weather can result in higher yields if it's not too extreme. Early Friday, USDA said last week's export sales hit a marketing-year low of 31.9 million bushels while shipments totaled 70.7 million bushels. It was another bearish week that now has total shipments down 13% in 2017-18 from a year ago. The confusing part of this riddle is that Brazil's FOB soybean price of $10.75 is the highest in over three months and 31 cents above prices at the U.S. Gulf. It is possible that with soybean prices near important highs in the U.S. and Brazil, China is holding back purchases to learn more about how South America's next crops fare. The trend in January soybeans remains sideways with resistance expected at the October high of $10.13. DTN's National Soybean Index closed at $9.22 Wednesday, priced 76 cents below the January contract and near its highest prices in three months.

Wheat

March Chicago wheat closed down 6 cents at $4.34 3/4 on Friday, a new contract low as futures spreads indicated commercial selling on light volume. The new low may be a post-holiday fluke, but the concern is if commercials are pulling back from the long side, as they have been the primary source of support for Chicago wheat since mid-August. It is well-known that U.S. and world wheat supplies are plentiful, and along with that, prices are getting no help from low exports. Early Friday, USDA said last week's export sales and shipments of wheat totaled 7.3 million and 7.0 million bushels, respectively, a bearish combination which makes no dent in U.S. supplies. The latest seven-day forecast remains mostly dry across the Southern Plains, a situation we will monitor through winter, but traders will likely ignore until spring. Friday's new contract lows resume the bearish trends in Chicago and K.C. wheat with prices dependent on the continued support of commercials. DTN's National SRW index closed at $3.91 Wednesday, priced 32 cents below the December contract and holding well above its August low. DTN's National HRW index closed at $3.70, also holding well above its August low.

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

Follow Todd Hultman on Twitter @ToddHultman1

(CZ)

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Todd Hultman